There is undoubtedly room for improved tax administration. However, before
considering the issue of capacity a more fundamental issue has to be addressed.
This has to do with the rationale to squeeze additional revenues from poorly
designed taxes. In other words, improved administrative capacity may increase the
negative effects on the economy and society in general, and lead to more inferior
outcomes than the present system. Thus, the major problem may not be lack of
capacity, but the tax structure itself. This reasoning has implications for the
sequencing of the reform activities to be discussed below.