COULD PRIVATIZATION INCREASE THE EFFICIENCY OF TAX ADMINISTRATION IN LESS-DEVELOPED-COUNTRIES

In spite of the fact that state tax collection systems in less-develop ed countries generally are characterized by high levels of tax evasion and official corruption, little experimentation with privatized tax c ollection has occurred in these countries. This is due in part to: (1) The fact that the literature on privatization has not focused on tar collection, and (2) the existence of prevalent misconceptions regardin g the effects of privatized tax collection in earlier periods. This pa per uses agency theory and privatization research to discover the cond itions under which privatized tar collection may be an efficient alter native to state tar collection, and to show that these conditions are present in many less-developed countries.