9. Budget and workforce

Central to a tax administration meeting its role in collecting revenue and providing services to citizens and businesses, is sufficient financial resources and a skilled workforce that can deliver quality outputs efficiently and effectively. This chapter examines the financial resources available to tax administrations, and how they are spent. It also provides information on tax administrations’ workforce, and how working practices are changing.

The overall level of resources devoted to tax administration is an important and topical issue for most governments, external stakeholders, and of course tax administrations themselves. While the budgetary approaches differ, in most jurisdictions the budget allocated is tied to the delivery of performance outputs which are outlined in an annual business plan.

When looking at the budget figures, close to 80 percent of tax administrations report an increase in their operational expenditure between the years 2020 and 2021. This is slightly more administrations reporting an increasing budget than during the previous periods (see Table 9.1.).

However, this data should be treated with caution. While on paper a significant number of administrations saw increases in their budget, this does not take into the account the increases in responsibilities that many administrations are reporting, especially as a result of additional pandemic responsibilities, as well as any inflationary pressures.

This issue is compounded as a significant part of the budgets is needed for salary costs, accounting for on average 73% of operating budgets annually (see Table D.6.). Any increases in budgets can be rapidly consumed by salary increases, which may be a contractual obligation. This mix of greater responsibility, and pressured budgets, is driving tax administrations to find innovative approaches, often using technology, so they can meet budgetary constraints, continue to deliver efficient services to taxpayers, and focus on the relevant compliance risks.

As tax administrations reflect on the working practices established as part of the pandemic response, the impact of longer-term hybrid or remote working is also being considered. This was explored in more detail in the OECD report Tax Administration: Towards sustainable remote working in a post COVID-19 environment (OECD, 2021[1]), and the examples in Box 9.1. set out some of the new working practices being adopted after the pandemic.

As stated earlier, the largest reported component of tax administration operating budgets is staff costs, with salary alone accounting for on average 73% of operating budgets annually, even though there are some differences among jurisdictions (see Figure 9.1.). Another important component is the operating cost for information and communication technology (ICT). On average this accounts for 11% of operating expenditure, with a few jurisdictions reporting ICT expenditure above 20% of their total operating expenditure (see Table D.6.). The averages for both items (salary and ICT) have remained stable over the past years.

Capital expenditure makes-up about 4.7% of total expenditure on average but varies significantly between administrations. A few administrations report figures below 1% while others report figures above 10% (see Table A.17).

It has become a fairly common practice for tax administrations to compute and publish (for example, in their annual reports) a “cost of collection” ratio as a surrogate measure of their efficiency / effectiveness. The ratio is computed by comparing the annual expenditure of a tax administration, with the net revenue collected over the course of a fiscal year. Given the many similarities in the taxes administered by tax administrations, there has been a natural tendency by observers to make comparisons of “cost of collection” ratios across jurisdictions. Such comparison have to be treated with a high degree of caution, for reasons explained in Box 9.2.

In practice there are a number of factors that may influence the cost/revenue relationship, but which have nothing to do with relative efficiency or effectiveness. Examples of such factors and variables include macroeconomic changes as well as differences in revenue types administered. These factors are further elaborated in Box 9.2.

Despite those factors, the “cost of collection” ratio is included in this report for two reasons:

  1. 1. The “cost of collection” ratio is useful for administrations to track as a domestic measure as it allows them to see the trend over time of their work to collect revenue and, as pointed out in Box 9.2., they may be able to account for the main factors that can influence the ratio; and

  2. 2. The inclusion of the “cost of collection” ratio and the accompanying comments set out in Box 9.2. can serve as a prominent reminder to stakeholders of the difficulties and challenges in using the easily calculated “cost of collection” ratio for international comparison.

Table 9.2. illustrates the change in the “cost of collection” ratios between 2018 and 2021 for the administrations included in this report. It shows that close to eighty percent of the administrations had decreasing ratios between 2020 and 2021, in contrast to the around eighty percent of administrations which had increasing ratios over the period 2019 to 2020. Figure 9.2. looks at the movement in the “cost of collection” ratios between 2020 and 2021 from a jurisdiction-level perspective. However, as mentioned in Box 9.2., the chart and the underlying figures have to be interpreted with great care.

On average ICT expenditure accounts for about 11% of operating expenditure. However, reported levels of ICT expenditure vary enormously between administrations. For those administrations able to provide ICT-related cost, around 50% reported an annual operating ICT expenditure exceeding 10% of the administration’s total operating expenditure in 2021 and another 20% reported figures between 5% and 10% (see Table D.6). While some of this variation can be explained by the different sourcing and business approaches, some cannot and point, at least on the surface, to expenditure levels that maybe somewhat below the support needed to provide the rapidly changing electronic and digital services administrations are increasingly being called upon to deliver. In parallel to this, administrations report that they are investing more in their cybersecurity practices, which are needed to protect the integrity of their system and maintain taxpayer trust. Box 9.3. and Chapter 10 on digital transformation highlight some of the practices in this field.

As regards the operational ICT solutions (i.e., solutions that are used to fulfil the tax administration's mandate and include systems for registration, return processing, payment processing and auditing), almost all tax administrations report using custom built ICT solutions, while 55% report also using commercial-off-the-shelf (COTS) solutions (see Figure 9.3.).

In addition, around 45% of the administrations report using software-as-a-service (SaaS) solutions. These are software licensing models where the tax administration pays for a subscription license and the cost depends on the usage. The software is installed on third party computers, not on tax administration computers, and is accessed by users via the internet. One of the main barriers to adopting SaaS more widely, is the storage of sensitive tax data on these third-party systems. As more legislative and technological solutions are identified, including regarding the encryption of data, it is possible the use of SaaS will increase.

In 2021, the administrations included in this report employed approximately 1.7 million staff (see Table A.18.) making the effective and efficient management of the workforce critical to good tax administration. Having a competent, professional, productive and adaptable workforce is at the heart of most administrations’ human resource planning. With salary costs averaging more than 70% of operating expenditures, any significant budget change invariably impacts staff numbers.

The “double pressure” created from reduced budgets and technology change, mentioned in the 2017 edition (OECD, 2017[2]) (see also Figure 9.4.), continues to be a significant management issue for most administrations. The challenge is compounded for some administrations which, due to contract restrictions or government mandates, may find it difficult to strategically down-size their operations other than through the non-replacement of staff who leave of their own accord.

Figure 9.5. provides average allocation of staff resources (expressed in full-time equivalents) across four functional groupings used to categorise tax administration operations.1 While the detailed data for each administration in Table D.8. shows a significant spread of values and a number of outliers for each function, on average the “audit, investigation and other verification” function and the “registration, services, returns and payment processing” function are equally resource intensive, each employing on average thirty percent of staff. Both ratios have remained stable over recent years.

ISORA 2022 also gathered key data concerning the age profiles, length of service, gender distribution and educational qualifications of tax administration staff: see Tables D.10. to D.15. and A.24. to A.31. In interpreting this data there are two main considerations to bear in mind:

  • Combined tax and customs administrations were allowed to use their total workforce for answering the underlying survey questions as it may be difficult for them to separate the characteristics of the tax and customs workforce.

  • Since ISORA 2020, staff metrics information is collected for the total number of staff, whereas in previous ISORA rounds (i.e., ISORA 2016 and 2018) staff metrics information was collected for permanent staff only. Trend analysis comparing staff metrics across the different ISORA surveys should therefore be conducted with caution. In particular for administrations that employ a significant number of non-permanent staff, this change in methodology may cause a shift in staff-metric-percentages that is not based on regular staff fluctuations but rather a result of including a different group of staff.

While there are significant variations between the age profiles of tax administration staff (see Tables D.11. and D.12.), it is interesting to see that there are also differences when viewed across different regional groupings. This may be the result of a complex mix of cultural, economic, and sociological factors (for example, economic maturity, recruitment, remuneration, and retirement policies).

Figure 9.6. illustrates that staff are generally younger in administrations in the regional groupings of “Asia-Pacific” and “Middle East and Africa” where, on average, around thirty percent of staff are below 35 years of age, whereas in the “Americas” and “Europe” this percentage drops to below twenty percent. At the same time, administrations in the “Americas” and “Europe” have a large percentage of staff older than 54 years.

Looking at the jurisdiction specific data, the percentage of staff older than 54 years grew in two-thirds of administrations over the period 2018 to 2021 (see Figure 9.7.).

The difference in age profiles is also largely reflected in the length of service of tax administration staff. Figure 9.8. indicates that a significant number of administrations will not only face a large number of staff retiring over the next years, but that many of these staff will be very experienced, thus raising further issues about retention of key knowledge and experience.

In light of the strong public interest in gender equality, administrations were invited to report total staff and executive staff respectively by gender. As can be seen in Figure 9.9., while many administrations are close to the proportional line, typically female staff remains proportionally underrepresented in executive positions and significantly underrepresented in a number of administrations, something that has remained unchanged since the 2017 edition of this report (OECD, 2017[2]).

Looking at the overall averages, whilst there are variations between jurisdictions (see Table D.15.), on average the share of female employees of total staff and executive staff has remained largely unchanged since 2018, with a very small increase of around 4 percent of female executives (see Table 9.3.). The jurisdiction-level data shows that in about two-thirds of administrations the percentage of female executives has increased since 2018 (see Table D.15.).

The ISORA survey also asked administrations to indicate whether staff has self-identified as neither female nor male (referred to as “other” gender for the purposes of the survey). Table A.31. shows that two administrations, Australia and New Zealand, reported having staff who self-identified as “other”.

Staff attrition, also called staff turnover, refers to the rate at which employees leave an organisation during a defined period (normally a year). High attrition rates may result from a variety of factors, such as downsizing policies, demographics or changing staff preferences. The attrition rate should be considered together with other measures, such as the hire rate, which looks at the number of staff recruited during a defined period, when evaluating the human resource trends of an administration.

While a high attrition rate combined with a low hire rate is usually associated with a general downsizing policy – and may therefore be accepted – administrations should be concerned where both rates are high. Recruitment is costly, not only the recruitment process itself but also the cost and time for training and supporting new staff members, and the significant down time before new staff are fully operational or able to perform at the highest level. Having high attrition rates are generally to be avoided.

Having attrition rates that are too low may also not be ideal. While an organisation is growing, a low attrition rate may be accepted. However, in situations where both the attrition rate and the hire rate are low, an organisation may not have the ability to recruit new skills as all positions are filled. This could be an issue particularly for administrations that are undergoing transformation and therefore are in need of staff with skills that are different from what is currently available within the administration.

While what is considered a “healthy” attrition rate differs between industry sectors or jurisdictions, the average attrition rate for administrations participating in this publication of 6.8% in 2021 and the average hire rate of 5.9% in 2021 would seem to present a reasonable range for tax administrations of between 5% and 10%. It is worth noting that the average hire rate for 2021 continues to be below those reported in 2018 and 2019, which may be a pandemic related impact. At the same time, the average attrition rate for 2021 is now back to pre-pandemic levels. (See Table 9.3.)

However, when looking at specific administration data, it becomes apparent that “attrition and hire” rates cover a very broad range. Figure 9.10. shows the relationship between tax administration attrition and hire rates. It illustrates that there are a number of administrations with attrition and hire rates well above 10% (upper-right box), while others show very low attrition and hire rates (lower-left box).

Whilst recruitment rates may vary by year, the challenge of training and knowledge transfer are constant. The COVID-19 pandemic brought these issues into sharp focus as HR processes that previously relied on face-to-face contact, had to be conducted remotely. Tax administrations report that these practices brought significant benefits to the administration and candidates, and as a result they are now being adapted for the longer term. Box 9.4. illustrates some of the innovative approaches being used both to attract candidates to the tax administration and to also digitise those processes.

The changes tax administrations are managing, whether technology, policy or budget driven, are constant. In addition, the wider digital transformation of the economy is changing the service expectations of taxpayers, and staff need the right tools and support to adapt. As a result, tax administrations are considering the best way to support staff through these changes, as well as ensuring they have the right tools for the tasks.

Tax administrations are also reporting that they are investing in services that can help ‘frontline’ staff better understand taxpayer needs and provide better services to them. This can cover a range of channels from call centres through to social media. These investments are allowing tax administrations to provide improved services, and their staff feel better equipped to deliver those high-quality services. Tax administrations also report that sophisticated analytics are being used to match staff skills to taxpayer needs. Box 9.5. highlights how France is using the sizeable amount of data it has on staff to build management tools that give insight into the staff profiles and where development gaps exist.

Anecdotal evidence, gathered through numerous Forum on Tax Administration (FTA) meetings, shows that tax administrations put considerable efforts into supporting staff during periods of transition, considering issues such as:

  • Staff welfare, which includes looking into staff motivation and satisfaction, health and safety related issues, work-life balance, assistance programmes, and ergonomic office equipment; and

  • Staff training, which includes how to best support those that have been given new tasks, those that have to perform their tasks from home instead of the office, as well as those that are leading partially or wholly virtual teams for the first time.

Technology is also providing new opportunities to analyse existing processes to look for efficiencies, including through the use of artificial intelligence, machine learning and robotic process automation (RPA) to automate some of the core tasks within a tax administration. Box 9.6. illustrates the wide range of uses that automation is being put to.

Table 6.1. in Chapter 6 highlights the rapid growth in the use of such services with for example, more than 50% of administrations reporting that they now using or planning to use RPA. (See also Figure 9.11. for the up-take of RPA by tax administrations over the years.) This is helping tax administrations respond to budgetary and workforce pressures as it is freeing up resource for staff to be focussed on more complex tasks.

While ISORA 2022 did not survey administrations as regards their strategy and approaches towards increasing staff capability, this remains a key topic for all administrations. This report highlights many areas of change that are taking place within administrations, and effective change relies on the capabilities of staff being developed. This is particularly important with digital transformation, as this frequently requires new skill sets. (See Chapter 10 for a more detailed discussion on this.)

In parallel, tax administrations report moving their training programmes into a virtual environment as shown in previous editions of this report, for example, using live online training sessions or pre-recorded videos/webinars (OECD, 2021[3]). While moving to a virtual training environment may have some up-front costs, it may save costs in the longer term as once produced, pre-recorded training material can be viewed at any time, from anywhere. Remote training can reduce travel expenses and can allow staff to learn at their own pace and convenience as well as increasing the number of staff members that can follow a course. New technologies are also helping facilitate the collaborative learning aspects, increasing the quality of the training experience. The latest approaches taken by the French tax administration are described in Box 9.7.


[3] OECD (2021), Tax Administration 2021: Comparative Information on OECD and other Advanced and Emerging Economies, OECD Publishing, Paris, https://doi.org/10.1787/cef472b9-en.

[1] OECD (2021), Towards sustainable remote working in a post COVID-19 environment, https://www.oecd.org/coronavirus/policy-responses/tax-administration-towards-sustainable-remote-working-in-a-post-covid-19-environment-fdc0844d/.

[2] OECD (2017), Tax Administration 2017: Comparative Information on OECD and Other Advanced and Emerging Economies, OECD Publishing, Paris, https://doi.org/10.1787/tax_admin-2017-en.

← 1. Previous editions reported the allocation of staff resources across seven functional groupings: (i) Registration and taxpayer services; (ii) Returns and payment processing; (iii) Audit, investigation and other verification; (iv) Debt collection; (v) Dispute and appeals; (vi) Information and communication technology; and (vii) Other functions. Starting with ISORA 2020 those seven groupings were reduced to the four groupings shown in Figure 9.5.

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