Appendix 1: An example terms of reference or tax research

Terms of reference for the Sierra Leone tax scoping study

Background of the research

Christian Aid in collaboration with the Budget Advocacy Network (BAN) and the National Coalition on Extractives (NACE) seeks to undertake a tax scoping study. The tax scoping study will identify key tax justice issues in Sierra Leone and will constitute the main entry points for civil society organizations to engage on tax systems for poverty reduction and national development. Tax work is a relatively new area
for civil society organizations and the lack of knowledge capacity and strategic interventions on tax justice issues are major stumbling blocks for citizens’ engagement on tax policy issues in the country.

The importance of the tax scoping study

Tax policy debates have raged in recent times in Sierra Leone against a multiplicity of concerns. The key concern behind the surge in the interest on taxation issues was the recently introduced goods and services tax (GST) by the government and its unintended impact on price increases, soaring levels of inflation and levels of income for the average citizen. Though the importance of taxes cannot be downplayed, however, the current focus by the government on a massive revenue generation drive remains at odds with existing economic realities of the average citizen. This situation is exacerbated by the challenges of poor management of public revenues, absence of effective state systems for revenue collection, huge dependence on external aid, serious loss of capital due to generous tax incentive systems and the failure of government to tax the extractive sector that could have constituted a major contributor to the Gross Domestic Product. Overall there is lack of tax compliance culture fuelled by lack of revenue returns in the form of improved service delivery in the social sectors for citizens. These are a multiplicity of challenges that civil society organizations need to engage with in Sierra Leone. The scoping study therefore seeks to respond to the growing needs of civil society organizations in the country to engage on influencing better tax policies, assist government with information on the impact of taxes on the poor and, overall, undertaking activities that can promote a responsive tax regime in the country.

Goal of the scoping study

The immediate goal of the study is to have a well-researched tax scoping study that includes an analysis of how our tax systems function, the systems and procedures instituted by tax administration bodies and the general impact on the poor citizens.

The ultimate goal of the study will be to have a country report on tax. This will enable civil society organizations to come to grips with issues of taxes and which area of tax work they can meaningfully engage in to mount effective tax advocacy work.

Specific outputs of the study

  • A clear picture of the history of tax in Sierra Leone
  • Areas of tax policy gaps that could be mapped out for civil society participation
  • Illustration of similar experiences with goods and services taxes in at least two or three African countries
  • Concepts of tax representation, good governance and accountability and how these are linked and clearly explained
  • Policy recommendations for civil society advocacy tax campaigns
  • A country tax scoping paper that could serve as a permanent reference guide for future debates on tax

Areas of inquiry

  1. Background on tax policy framework in Sierra Leone
  2. The design of tax policies and scope of public participation in policy design with reference to the GST
  3. Accountability and reporting of tax revenue and tax management to include GST and other types of tax
  4. The link between taxation and representation
  5. Types of taxes and whether progressive and regressive, their advantages and disadvantages and their contribution and relevance to Sierra Leone
  6. Best practices of a good tax system and factors promoting a tax compliance culture

Scoping study methodology

The tax scoping paper would involve the use of both primary and secondary data. The study will rely mainly on desk study involving analysis of existing literature on tax. Various documents from government departments, donors, IFIs [international financial institutions] and newspaper articles among others will be used to identify the tax trends and tax trajectory over time.

The study will also conduct some interviews of key experts on tax to assess opinions on how the tax reform works and the general challenges faced in the tax collection and management bodies. Key targets for interviews will be tax administration officials; research institutions and donor officials will be considered but will not be a specific requirement.

Specific skills and qualification of the lead researcher

The specific requirement of the lead researcher includes the following:

  1. Demonstrated experience of conducting tax or tax-related work with a good background in research and economic policy analysis
  2. Excellent knowledge of tax and economic policy-related issues in a developing world context
  3. Experience and knowledge in region-wide taxation issues and poverty reduction analysis
  4. Demonstrated experience in working with civil society organizations, especially in developing countries
  5. Ability to manage and deliver research projects on deadlines

Role and responsibilities of the lead researcher

  1. Provide overall leadership in conducting the scoping study
  2. Assisted by a local research assistant, responsible for carrying out the analysis of the secondary data
  3. Conduct some high-level interviews with relevant key personnel in the tax sector
  4. Produce a clear outline for the design of the study in accordance with the areas of inquiry identified in the scoping paper
  5. Produce the first draft and amended draft report
  6. Produce the final report according to agreed time frame
  7. Conduct validation and debriefing workshop sessions on the final paper
  8. Present the report to civil society organisations in a workshop

Responsibilities of the contracting agencies

Christian Aid, BAN and NACE will be responsible for commissioning and managing the research team and contract and finalizing details of the work schedule.

Christian Aid will provide supervisory support to the research team and ensure quality control.

Time frame of the study

The study should be conducted and launched within a two-month time period from the commencement date agreed mutually between the contracting agencies and the lead researcher.

Schedule of research activity and budgets

This would be developed and attached upon the finalization of the terms of reference.