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"Reprinted from Political economy, vol. 20, no. 7. July, 1912." ; Mode of access: Internet.

An evidence-based approach is being promoted and adopted in many public service areas, but tax authorities have so far only sporadically subscribed to it. We, first, present arguments for an evidence-based approach to tax administration and outline its main features. Second, studies on the effects of tax-reporting schedules are considered to illustrate the logic, potential challenges and outcomes of such an approach. Third, we discuss the main principles of an evidence-based approach, as well as its practical and political obstacles in the context of taxation. An evidence-based approach means basing administrative practices and strategies on an understanding of relevant processes that is obtained from systematic, theory-driven and cumulative research, using various appropriate methodologies including experimental and quasi-experimental evaluation designs. However, an evidence-based approach needs to consider the challenges posed by short-term orientation and risk-averse defensive postures that result from political agendas, public media scrutiny and intraorganisational dynamics.

Every tax administration throughout the world collects taxes from its taxpayers in order to garner resources for the government's public expenditure. Naturally, this process becomes easier for the tax administration if the taxpayers willingly and voluntarily comply with their obligations under the country's tax code. In enhancing taxpayers' level of voluntary compliance, three factors play a very important role – certainty about the tax to be paid (it relates to the ability to determine without any ambiguity, the tax payable on any transaction since ambiguity adds to the cost of compliance), the convenience to pay it (the means and methods using which the taxpayer can pay his share of tax to the government with minimum compliance cost), and the attitude of the tax administration which drives both of these (helpful, unobtrusive and non-adversarial). It is therefore an important responsibility of every country's revenue body to provide relevant and easily understandable information to the taxpayers which would help facilitate paying of taxes, filing of returns and other activities by the taxpayers. As a corollary to this, improving information service delivery also becomes critical to boost the said voluntary compliance. In the realm of information service delivery, revenue bodies have realised that each category or group of taxpayers act or respond differently to their immediate tax environment as well as to the information that is provided by the revenue bodies. There is a need to carry out 'taxpayer segmentation' so that the diverse categories of taxpayers can be catered to accordingly.