Assessment of Comprehensive Own-Source Revenue Potential and Tax Gap Study of County Governments — World Bank

Alma Economics sought to identify the maximum revenues that each County Government in Kenya can generate from a set of Own-Source Revenue (OSR) streams and estimate gaps between maximum and actual revenues. The work was commissioned by the Commission on Revenue Allocation (CRA) of Kenya in collaboration with the National Treasury, County Governments, the Kenya National Bureau of Statistics (KNBS), the Council of Governors, and the Controller for Budget, with the support of the World Bank.

We developed a methodological framework including individual models for each OSR stream drawing from various sources, including County Government Finance Acts and Bills, audited data on revenue collections (made available by the Office of the Auditor-General in the County Governments’ Financial Statements), as well as from surveys and interviews with County Government representatives. Our analysis identified the counties with the best performances in raising revenues for each stream (considering the county-specific economic base for each stream) and estimated the maximum revenues that County Governments could generate from each stream if they operated in line with best practice.

Key findings suggest that counties can substantially improve their collection of revenues through revising their current policies and collection systems – for example, by streamlining taxation and fee structures and allowing automatic and cashless payment systems.

Our research offers an in-depth understanding of key issues around raising revenues from own sources to policymakers in Kenya, thus contributing to the establishment of an effective and fair system for revenue collection across the country.

➥ Read the report here.

Land and property taxation in Scotland — Scottish Land Commission

In a report commissioned by the Scottish Land Commission, Alma Economics explored tax reforms to encourage a more productive use of land in Scotland.

Our team developed a model that utilises the best available data and evidence of behavioural effects to estimate the impacts of different policy options. We measured the potential impact of fiscal incentives around reducing the stock of derelict sites and encouraging a more diverse pattern of land ownership, accounting for behavioural responses to tax changes. The report concludes by recommending a revenue-neutral policy package.

➥ The report can be found here.

Dormant Assets funding in England: analysis of consultation responses — Department for Digital, Culture, Media and Sport

The UK’s Dormant Assets Scheme unlocks long-untouched funds, lost or forgotten by their owners, to tackle pressing issues. Recently, a further £3.7 billion entered the scope of the Scheme under the Dormant Assets Act of 2022. An estimated £738 million of this is expected to be made available over time to the Scheme’s social and environmental causes in England.

The Department for Digital, Culture, Media and Sport (DCMS) sought the public’s input on where best to target these funds. DCMS commissioned Alma Economics to coordinate a consultation.

We designed a user-friendly online questionnaire and held 8 consultation events over 12 weeks. Over 3,300 charities, businesses, academic think tanks, and other respondents shared their perspectives on present and prospective recipients of funds via the Scheme. Our team collected both qualitative and quantitative data to identify stakeholders’ funding priorities.

Alma’s experts utilised thematic analysis to pinpoint common themes in responses to open-ended questions. We also explored the differences in diverse groups’ opinions by conducting segmentation analysis on multiple-choice questions.

➥ See the government’s response to the consultation here.

Fairer Council Tax: Consultation analysis

Alma Economics was commissioned by the Scottish Government to analyse the responses to a consultation seeking views from the public on increasing Council Tax charges by 7.5%, 12.5%, 17.5% and 22.5% for Bands E through H, respectively. These changes were designed to address a perceived imbalance in the system: as noted in the Commission on Local Tax Reform’s 2015 report, under the current system, the effective Council Tax rate is higher for lower-value properties (when expressed as a percentage of the estimated property value).

Through the Joint Working Group on Sources of Local Government Funding and Council Tax Reform (JWG), the Scottish Government and Convention of Scottish Local Authorities (COSLA) sought the public’s views on this proposed change to the current system. A public consultation was open from 12 July until 20 September 2023, and aimed to collect views and opinions on:

• Whether households in properties in the highest Council Tax bands (Bands E to H) should make a greater contribution, and

• The relationship between the valuation band a property is in, and the tax rate set by the council for the local authority area.

The consultation received over 15,000 responses in total. Our research methodology consisted of: (i) manual reading of a representative sample of responses; (ii) an automated approach assigning themes to remaining consultation responses by training a set of machine learning models on manually-reviewed responses; and (iii) an iterative process through which researchers reviewed the theme labels assigned automatically and fine-tuned the algorithm to increase the robustness of our thematic analysis.

➥ See our full report here.

Independent Review of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 — Welsh Government

In 2017, the Welsh Government introduced its own taxation policy for transactions involving the sales and leasing of land and buildings. Wales’s new Land Transaction Tax and Anti-avoidance of Devolved Taxes Act 2017 (LTTA) replaced the UK’s Stamp Duty Land Tax (SDLT) and devolved the power to collect and administer Land Transaction Tax to the Welsh Revenue Authority. Designed to clarify and streamline legislation, the policy is aimed at improving taxpayers’ compliance.

Alma Economics was commissioned by the Welsh Government to conduct an independent review of the LTTA, assessing the policy’s success at achieving the desired improvements over the SDLT. Our team’s methodology in conducting this technical exercise comprised i) an online survey of experienced tax practitioners, ii) in-depth interviews with tax professionals and technical committees of professional bodies, and iii) a review of the available evidence on land transactions.

Our findings, presented to the Minister for Finance and Local Government on 1 February 2023, suggest that:

• Across all review aspects, policy intents have been achieved and remained appropriate.

• The LTTA’s implementation was positively received and contributed to compliance.

• Policy objectives should be periodically reviewed and may require adjustment in light of any changes to market values.

➥ Read the full report on the Welsh Government website here.

Statutory licensing scheme for all visitor accommodation providers in Wales — Welsh Government

Alma Economics was commissioned by the Welsh Government to analyse the responses to a consultation seeking views from tourism stakeholders and the public on the design and operation of a statutory licensing scheme for all visitor accommodation providers in Wales. The consultation, which was conducted by the Welsh Government, received over 1,500 responses.

Our research methodology consisted of: (i) the manual reading of a sample of responses – in addition to responses selected at random, we also included the most detailed responses to ensure the sample was representative and insightful; (ii) an automated approach assigning theme labels based on the initial manual reading analysis; and (iii) an iterative process through which researchers reviewed the theme labels assigned automatically and fine-tuned the algorithm to increase the robustness of our thematic analysis.

The findings from our analysis will be used by the Welsh Government to inform the future design of a statutory licensing scheme, with the aim of raising standards of health, safety and quality across the industry and providing a level playing field for all operators.

➥ See our full report here.

Proposals for a discretionary visitor levy in Wales — Welsh Government

Alma Economics analysed over 1,200 responses to a public consultation on the Welsh Government’s proposal to provide discretionary powers for local authorities to raise a local visitor levy.

A key element of our research methodology involved deploying an Active Learning machine learning model to robustly analyse the key themes raised by respondents to the consultation questionnaire. This involved training a suite of models on a sample of manually reviewed responses, with our team of researchers supervising the model to determine the distribution of themes across the whole respondent base.

The findings from our analysis will be used by the Welsh Government to inform the future design of the levy, ensuring it is implemented in a fair way which supports a sustainable tourism industry, whilst minimising the administrative burden on local authorities and businesses.

➥ Read the full report here.

Evidence review of elasticities relevant to a visitor levy in Wales — Welsh Government

We were commissioned by the Welsh Government to critically review and synthesise estimates of elasticities relevant to a visitor levy in Wales. In the absence of Wales-specific evidence, our search protocol was designed to prioritise estimates of elasticities from comparable jurisdictions and from the most robust and credible sources.

Our research found that elasticities vary significantly depending on factors such as the visitor market of interest, the place of origin of the visitor, the nature of the tourist good and service, the methodology adopted by the study, and the timeframe considered.

This research will inform the design and development of the visitor levy in Wales, as well as assist local authorities in their decision-making regarding the implementation of discretionary elements of the levy.

➥ Our final report can be found here.

Preliminary Evaluation of the Technical Assistance Provided to Greece — European Commission

For the Preliminary Evaluation of the Technical Assistance (TA) provided to Greece by the European Commission, Member States, and the IMF, we carried out in-depth quantitative and qualitative analysis to understand the relevance, effectiveness, efficiency and sustainability of the TA in the areas of tax and central administration reform.

Our recommendations were developed collaboratively with key stakeholders to ensure they enjoyed widespread support and were administratively and politically feasible. They helped lead to a transformation of how TA is provided to EU member states, from creating a permanent EU-level structure to promoting ownership by individual countries and overhauling funding.

Review of Tax Revenue Forecasting Models for the Scottish Housing Market — Scottish Government

Alma Economics worked with the Scottish Government to explore models for forecasting the housing market to inform the development of the Land and Buildings Transaction Tax forecasting model. The aim of the research was to provide a comparative evidence base for officials to decide on whether, and how, to change the current approach. We designed a sophisticated assessment framework to systematically highlight the strengths and weaknesses of each model’s approach. A summary table provided policymakers with an ‘at a glance’ overview of our assessment along with a list of recommendations.

 ➥ The final report can be found on the Scottish Government website.

Political economy analysis of taxation in Somalia

Alma Economics carried out a political economy analysis of domestic revenue mobilisation in Somalia in which we investigated the relationship between taxation, public service provision, and political attitudes. The project shed light on tax collection patterns in Somalia, cultural attitudes towards taxation and government, the business environment, and additional constraining factors faced by tax collectors.

Our research led to the formulation of a set of recommendations aimed at supporting political and economic reform in the country. These sought to address key obstacles to improving revenue collection, such as unresolved constitutional questions, the lack of public trust that taxes will be used for the effective delivery of services, and insufficient data collection concerning the operation of businesses, among others.

Sierra Leone tax gap estimation

Alma Economics conducted a data-gathering exercise to inform a tax gap study in Sierra Leone, supporting the National Revenue Authority (NRA) and the Ministry of Finance and Economic Development (MoFED).

We assessed the tax gap by tax type and by sector, provided an initial quantification of tax incentives in place, and developed a theoretical framework for assessing the desirability of tax incentives.

We also conducted a data review and needs assessment, with the aim of strengthening MoFED’s and NRA’s revenue forecasting capacity. Lastly, we identified and customised appropriate revenue forecasting models for use in Sierra Leone and, through the provision of training, built staff capacity to use, adjust, and update the models.

Tax Incentives for Individual Learning — UK Commission for Employment and Skills (UKCES)

Alma Economics conducted a comprehensive review of tax incentives and the channels through which they affect investment on skills acquisition and training for the UKCES.

To examine the impact of different approaches, our econometricians developed a sophisticated microsimulation model. The model explored pay and training decisions of different individuals using data from several large surveys. The model also estimated the impact of training on employee productivity as well as examining overall Exchequer costs associated with subsidised training.

The final report presented the research findings using clear, non-technical language and practical recommendations, helping to drive the policy debate forward.

➥ You can read the review here.

Non-tax revenue potential in Tanzania

Alma Economics undertook an assessment to improve the collection of non-tax revenues in Tanzania. As part of our approach, we examined how the country could best make use of its natural resources and how it could promote tourism.

Our team analysed a large number of sectoral and firm-level data to produce a flexible framework to estimate ‘size of the prize’ effects of introducing various reforms and addressing bottlenecks. Furthermore, we identified the key assets of the country and advised the Tanzanian Ministry of Tourism on how to best market these.

By reviewing best practices in terms of tourism reforms in neighbouring countries, our team provided recommendations for diversifying the tourism product and expanding source markets.

Scoping for Major Project delivery models in Nigeria

We worked with the Government of Nigeria to undertake the scoping for a Major Projects delivery unit. 

At the time of the review, Nigeria lacked a comprehensive cross-government understanding of the size and cost of the administration’s Major Projects portfolio, hindering the country’s ability to prioritise and manage costly projects.

To support the Nigerian Government’s efforts to build that understanding, our team reviewed models suitable for establishing a unit for the delivery of major infrastructure projects in the country. We provided technical advice covering the setting up and bringing into operation of a Major Projects Unit to manage expedited completion of projects considered national priorities, such as roads and energy transmission.