Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 33
Alternatives to the Taxation of Heady Vehicles
Applications Manual-Admini.~trnti7,P, FffiriPnm,
5.0 Administrative Efficiency
,, ~
From a narrow public-sector perspective, administrative efficiency is measured by
comparing public-sector administrative and enforcement costs to total revenue collected.
From a broader perspective, administrative efficiency can be measured by also including
the costs incurred by the private sector in complying with the administrative requirements
of a tax.
For the evaluation of alternative tax options, all three types of administrative cost should be
measured as incremental costs resulting from any tax or set of taxes that is being evaluated
in comparison with all existing taxes and related programs that are a.~.~um~d to rontin11~ in
effect for a base-case option.
~ Or- Amp, ~ .~ ~,,~,~- ^,,
For existing taxes to be administered using existing procedures, administrative and
enforcement costs can be estimated by analyzing agency budgets. However, estimation of
private-sector compliance costs will require a more detailed analysis of the procedures used
by various categories of taxpayers and estimation of both the unplementation and annual
costs of the proposed system.
The evaluation of administrative efficiency should give balanced attention to each tax or fee
within an overall tax system alternative, and should also consider the adoun~strative
efficiency of the system as a whole. Evaluation of each system as a whole may help to
determine whether there is a potential for savings by combining fees or selecting a tax
system composed of only one or two taxes instead of a set of several taxes and fees.
5.l Public-Sector Administrative and Enforcement Costs
The steps involved in estimating public-sector costs of administering and enforcing
highway user taxes are:
I. Identify all agencies and divisions of agencies responsible, including all supporting
services and management functions;
2. Assemble and analyze budget data and actual expenditures for each agency and
division responsible for aU functions related to the user taxes;
3. Interview agency staff a) to develop the proper basis for fully allocating costs for the
existing tax structure, and by to develop the basis for estimating avoidable costs and
for estimating any additional new costs for alternative taxes and fees;
Ca mbndge Sys tema tics, In c.
33
OCR for page 34
Alternatives to the Taxation of Heavy Vehicles
Applications Manual - Administrative Efficiency
4. Fully allocate costs for each tax and fee for the existing tax structure; and
5. Estimate avoidable costs and incremental new costs for each tax option.
The Oregon Weight-Mile Tax Stucly provides Me best available example of the application
of these procedures.)
The agencies and divisions diet were found to be responsible for at least some costs
associated with the Oregon weight-mile tax (WMT) were:
· The Motor Carrier Services (MCS) Division of the Oregon Public Utilities Commission
(PUC), which is responsible for registration and audits:
~ The Transportation Administration Division of PUC;
· The Policy and A~ninistrabon unit of PUC;
.
Services provided to PUC by other state agencies;
The Motor Carrier Services Group (Weighmasters) of Me Oregon Department of
Transportation (ODOT); and
State Police.
Review of other units resulted in a conclusion that none of the costs of the other divisions
of the PUC (Rail Service, Transportation Safety, or Economic Regulation) and none of the
prorate (IRP and lFlA) functions of the MCS Division should be charged to the WMT
because they incur no costs directly or indirectly related to the WMT.
Exhibit 5.! shows four flow charts (on three pages) summarizing the overall approach used.
Except for some small costs incurred by other agencies (discussed later), the administrative
costs associated win the WMT involve four components of the PUC, represented by the
numbered boxes in the exhibit:
1. WMT registration expenditures;
2. WMT audit expenditures;
3. WMT transportation administration expenditures; and
4. WMT policy and administration expenditures.
The basic costs to be estimated, following the procedures outlined In Exhibit 5.l, are fully
allocated costs including ah overhead items, as distinct from avoidable costs (i.e., costs that
could be avoided if the WMT was e~irninated). Avoidable costs are considered for other tax
options in Step 5 after fully allocated costs are estimated for the current tax structure.
Cambridge Systematics and Sydec win Pacific Rim Resources, Technical Memorandum No. 5 -
Administrative Costs of Oregon's Weight-Mile Tax, prepared for the Oregon Legislative Revenue
Office, the Oregon Public Utilities Commission, and Me Oregon Depart lent of Transportation,
Salem, Oregon, January 1996, pp. 5-1 to 5-9.
34
Cambridge Systematics, Inc.
OCR for page 35
Alternatives to the Taxation of Heady Vehicles
Applications Manual - Administrative Efficiency
Exhibit 5.] Process for Allocating Expenditures to
WeighI-Mile Tax Administration
Allocating Registration ExpendFihlres
Motor Carrier Services:
Registration Expenditures
Subtract IRP
expenditures
Allocate remaining registration among taxes:
· Weight-Mile Tax, 85%
· Other taxes, 15%
Allocating Audit Expenditures
Motor Carrier Services:
Audit Program Expenditures
Allocate audit expenditures among taxes:
· Weight-Mile Tax, 85%
· Other taxes, 15%
Registration Expenditures
Weight-Mile Tax Registration Expenditures
1
Weight-Mile Tax Audit Expenditures
, ...... ....... . .. . ..
........................... . ""","" i.~.~.E~
0
Cambridge Systematics, Inc.
35
OCR for page 36
Alternatives to the Taxation of Heady Vehicles
Applications Manual - Administrative Efficiency
Exhibit 5.1 Process for Allocating Expenditures to
Weight-Mile Tax Administration (continued)
Allocating Transportation Administration Expenditures
Transportation Administration (TA)
Expenditures
Divide TA
in thirds to:
· Tax administration
· Economic regulation
· Transportation safety
Allocate tax administration share
among taxes:
· Weight-Mile Tax, 85%
· Other taxes, 15%
Tax Aclministration Share
of TA Expenditures
Weight-Mile Tax TA
36
Cambridge SystemaNcs, Inc.
OCR for page 37
Alternatives to the Taxation of Heady Vehicles
Applications Manual - Administrative Efficiency
Exhibit 5.1 Process for Allocating Expenditures to
WeighI-Mile Tax Administration (continued)
Allocating Policy and Administration Expenditures
PUC
Policy and Administration (P&A)
Expenditures
Divide PEA costs
among PUC programs:
· Transportahon, 72%
· Other, 28%
Divide transportation PEA share
in thirds to:
· Tax administration
Economic regulahon
Transportahon safely
Divide tax administration P&A among taxes:
· Weight-Mile Tax, 85%
· Other taxes, 15%
Transportation P&A Expenditures
Tax Administration P&A Expenditures
Weight-Mile Tax P&A Expenditures
WeighI-Mile Tax Administration Cost = 0 + 0 + ~ + 0
Source: Cambridge Systematics and Sydec with Pacific Rim Resources, Technical Memorandum No. 5 - Administrative
Costs of Oregon's Weight-Mile Tax, prepared for the Oregon Legislative Revenue Office, the Oregon Public
Utilities Commission, and the Oregon Department of Transportation, Salem, Oregon, January 1996, Figure 2.1,
pp. 5-3 to 5-~.
Cambridge Systen2atics, Inc.
37
OCR for page 38
Alternatives to the Taxation of Heady Vehicles
Applications Manual - Administrative Efficiency
As summarized in the flow charts, estimating each of these expenditures involves the
aBocation of major portions of overall PUC expenditures to the WMT. The allocations are
based either on assigning costs directly involved with administration of the tax or on
estimating shares of overhead costs that must be divided between the WMT and other
responsibilities of the PUC.
The basic cost data used for this analysis consisted of the agency's budget document and
computer printouts of detailed monthly expenditure reports for each unit of interest.
Nearly one hundred categories of expenditures are reported each month for each major
unit of PUC, showing expenditures to date and unobligated balances for each category.
These detailed expenditure reports were reviewed in the process of deciding how to
properly allocate aD costs to the WMT.
The costs of the registration program of the MCS Division include the costs of
administering the TRP program, so they had to be subtracted out, as shown in the first step
in the first flow chart of Exhibit 5.1. The cost of administering the Alla program did not
have to be subtracted out because it is a separately reported cost center and was not
included in the division's cost data.
The most logical way of allocating the remaining costs of the registration program among
the WMT and other taxes is In proportion to the amount of related revenue collected,
because Me jusUficabon for incurring Me cost of the registration program was primarily
based on Me amount of taxes collected Trough Me program. The relevant revenues used
In Me analysis are shown In Me following table:
Oregon MCS Division Revenues (1993 - 1995 Biennium)
Revenue Source
Percent of
Revenues Total
Weight-mile tax $125,690,503 (85.2%)
Prorate revenues collected 2,274,715 (1.5%)
Prorate revenues from other states 2,204,036 (1.5%)
Commercial registration revenues 3,214,545 (2.2%)
Prorate revenue collected for transmission to over states 14,068,133 (9.5°/O)
Source: Cambridge Systematics and Sydec win Pacific Rim Resources, Technical Memorandum
No. 5- Administrative Costs of Oregon's Weight-Mile Tax, prepared for Me Oregon
Legislative Revenue Office, Me Oregon Public Utilities Commission, and Me Oregon
Department of Transportation, Salem, Oregon, January 1996, p. 5-7.
These percentages were used for the allocation of registration costs to the WMT, as shown
in the second step of the first flow chart in Exhibit 5.~.
The costs of the audit program were allocated using the same allocation factors, following
the same logic as for the registration program. It was not necessary to subtract In 1 A or IRP
prorate functions, because the audit program covers only costs associated with auditing for
Me taxes listed above, and it excludes other costs of administering these taxes.
38
Cambridge Systematics, Inc.
OCR for page 39
Alternatives to the Taxation of Heady Vehicles
Applications Manual - Administrative Efficiency
Out-of-state and foreign (Canada) travel expenses connected with audits are reimbursed
directly by carriers and constitute a small proportion of audit costs. These were induded as
part of the cost of administering the taxes, even though they are paid for by the carriers
rather than through the tax-administration system. More properly, these costs should be
induded as part of the estimates of compliance costs to industry.
The costs of Transportation Administration (flow chart on the second page of Exhibit 5.1)
were allocated in three equal parts among the three functions of {ax administration,
economic regulation, and transportation safety. The staff of this unit spend about equal
time with these three functions, exclusive of time spent with the Commission's office (a
cost discussed below). The tax administration portion was further allocated among the
WMT and other taxes, in accord with the amounts of the five categories of taxes shown in
the table above, based on the same logic used for allocation of the cost of the registration
program.
The costs of the Policy and Administration (P&A) unit, which includes the Commissioners'
office plus administrative services to the above functions and others, was allocated among
all other PUC functions in proportion to the size of the programs, because the costs of these
functions were primarily based on the relative size of these programs. The exceptions to
this were that: 1) the costs of Administrative Hearings are reported and charged to specific
cost centers of the PUC (47 percent of these costs were charged to Transportation
Administration); and 2) 100 percent of Consumer Assistance was charged to Utility
Regulation because it deals only with consumer concerns over utilities. All other P&A
costs were allocated among the various cost centers based on the number of full-time staff
equivalents, which is essentially the same as allocation based on costs.
The result of the avocation of an P&A costs to cost centers is that 72 percent of the total is
allocated to Transportation, as shown in the first step of the final flow chart in Exhibit 5.1.
The final two steps in the allocation of P&A costs to the WMT are repeats of procedures
described above, as shown at the end of Exhibit 5.1.
The WMT shares of the costs of services provided to the PUC by other state agencies were
estimated using the same allocation factors as used for the other components of
Transportation Administration. These induded substantial charges for services to PUC
provided by the Attorney General's office and various other administrative services.
Exhibit 5.2 presents the results of the analysis described above, with the addition of small
amounts of costs associated with the WMT for the Oregon State Police and the
Weighmaster unit of ODOT. These include staff time spent recording license plate
numbers and transmitting them to the PUC, and time spent issuing citations for violations
of WMT requirements.
The table in the first part of Exhibit 5.2 shows the total costs for the various units of the
PUC responsible for activities related to the WMT tax, along with breakdowns by major
category. The lower table shows the results of the allocation of PUC costs, plus the small
amount of State Police and Weighmaster costs. It also shows the projected total WMT
Cambridge Sysfemofics, Inc.
OCR for page 40
Alternatives to the Taxation of Heady Vehicles
Applications Manual - Administrative Efficiency
EM
~En
O ~
0
O ~
0 0
~
~u,
.>
_.
.
14
oh
._
~X
·0
-
¢ ~
Ed
0
O ~
~0
·_ ·~
PA ILL
-
~s"
so
O U.
_ 06
·
· -
x
40
;^
e 10
O Ed
~1
O
~ a
~ .
~ E
0 ~
8<
85 ~
-
c: ~
0 0
s
o a
ma
~ ·f
.%
o
.~
U.
.
04
it:
O
-
00
Cal
_
-4 d ~ °°
_
O ~ O
00 ~ 00
O ~ ~
\0
In 00 0
00 ~ o0
_ ~ _
00
O O
_
~ O C~
00
_ ~
o
· t_
00
_4
o
00
00
00
0\
00
C~
-
_.
C~
~0
as
oo
_
U,
-
O ~ = ~ g
C~
#
E~
._
o
0
a:
o
=
~¢
o
~Q
X
o
·_'
C)
=
¢
[3 6° ~-
·§
¢
o
8
~ ~ o~
3 E o S
~ _
.C) ~ 8
~ ·" ~
o
-
oo
,~
~ c: o
.e~ ~ -^
0 ~ ~
~ t!e O
~ a =^
V
i-.C
~: -
-0
E~
.
~-
~¢
08
00
E 0
sa 0
1 {_
~ o
oo ~
._
3 fi
U)
o
oo~
~ ~:
o o
o ~
o
o
;-
.
Ct
U,
.
U)
U,
o
-
.
_
~ _
~ _J
.
C~ _
0 3
O
O
5:
~ _
^
O
O ~
.
· ~ Ct
~4 U~ ~
3
es
~ oo - ~
mo o
n ~ o
c)
c~ ~ ~
.o
~ ~ o
&
u ~ ~
~:
~o
e
o
~ -
c~
u,
::
o
· -
c)
o
v,
Cambridge Systetnatics, Inc.
OCR for page 41
Alternatives to the Taxation of Heavy Vehicles
Applications Manual - Administrative Efficiency
receipts for the period covered by the analysis. As shown In the last part of the table, the
total cost of a~ninister~ng the WMT was estimated to be 4.S percent of total WMT receipts.
The procedures described above have been illustrated for a single tax, the Oregon Weight-
Mile Tax. The same procedures can be used for each of the taxes and fees included in a
state's tax system.
The final step in estimating a~ninistration and enforcement costs is to estimate avoidable
costs and incremental new costs for each tax option to be evaluated. These estimates are
developed by focusing on proposed changes in the tax structure. This step is inherently
less precise because of the lack of available budgets and accounting data, but must be done
with equal attention to each specific administrative function in order to arrive at reasonably
accurate cost estimates.
Fully allocated agency costs provide the most complete estimate of the cost of a tax to
taxpayers. However, these costs include fixed cost items such as buildings and equipment
and cost items that can be reduced only partially if the tax was eliminated, such as many
support services and management functions. Avoiciable costs exclude these fixed and
partially fixed costs. Avoidable cost estimates should also take into account the costs of
administering alternative taxes or tax increases that wouic3 occur under any alternative tax
option.
The basic approach in estimating avoidable costs and new incremental costs is to review
every function and every line item in ah relevant budget accounts and to answer the
following types of questions:
I. What functions could be eliminated, if any, without risking increased evasion?
2. What reductions In staff couict be made, if any, for each function, without risking
increased evasion? What increases in staff are necessary for any new tax or tax
increase includes] in the tax option?
3. Can overheat] functions (services and management) be reduced proportionately if
some existing functions and staff reductions can be made?
4. Are there any potential savings in building space or equipment that are achievable?
5. For any new tax that is acIded, could a~ninistrative efficiencies be achieved by
combining any functions such as audits or accounting reports?
6. For any new tax that is added, are there any entirely new functions that should be
created In order to reduce evasion or achieve other objectives?
7. What start-up costs will have to be incurred (e.g., building space, equipment, software
development, or trairung)?
In answering these types of questions, it may prove helpful to contact personnel in other
states that have recently considered similar tax alternatives or that have Implemented taxes
similar to Hose being evaluated.
Cambridge Systematics, Inc.
41
OCR for page 42
Alternatives to the Taxation of Heavy Vehicles
Applications Manual - Administrative Efficiency
· 5.2 Compliance Costs
Compliance cost is best clefined as the total nonrecoverable administrative costs that a
taxpayer incurs In connection with the payment of highway user taxes and fees (exclucling
the amount of taxes and fees paid). Compliance costs include the costs of ah tax-related
work connected with preparing tax returns as wed as the cost of developing and
unplementing procedures needed to prepare the tax returns. Compliance activities
requires! by motor carriers include the following:
· Registration - Costs of fining out forms on vehicles and firms;
· Notification- Costs associated with informing the state of all configurations and
operating weights in which a given power unit operates;
· Recording- Accurate tracking of total mileage per truck for all operations within each
state for each configuration;
Reporting - Preparation of periodic reports on miles operated, fuel consumed, and fuel
taxes paid;
Permit Fees - Preparation and submission of applications for trip permits, fuel permits,
oversize/overweight permits, etc.; and
Audit- Assignment of the carriers' staff to assist the auditors during the periodic
auditing process and storage of detailed vehicle records required for the audits.
Fuel taxes and sales taxes also entail compliance costs borne by suppliers of fuel, vehicles
and parts.
Private-sector compliance costs are inherently more difficult to estimate than public-sector
administration and enforcement costs because of the lack of any single source of data and
the very high cost of obtaining accurate accounting data from a representative sample of
firms. Furthermore, estimates that have been macle based on interviews with carriers are
subject to an unknown amount of systematic upward bias because of the observed
tendency of some respondents to impress interviewers with the burden caused by taxes.
Compliance costs are low for most taxes and fees that are not VMT related, but are
substantially higher for VMT-related taxes, and therefore analyses of compliance costs
should focus on these taxes. Compliance costs have been reclucecI significantly in the last
few years for interstate carriers as all contiguous states have become members of TRP and
iF-1A, and they could be recluced further if the three basic forms of VMT-related taxes were
combined into a single base-state reporting system.
Compliance costs are now moderate for carriers which do not operate in weight-distance
tax states but which are subject to base-state systems of fuel-use reporting and reg~stration-
fee apportionment. Compliance costs are very low (a small fraction of one percent) for
carriers not subject to any of these mileage reporting requirements. Although these
reporting requirements need not apply to intrastate carriers for apportionment purposes,
42
Cambridge Systematics' Inc.
OCR for page 43
Alternatives to the Taxation of Heavy Vehicles
Applications Manual - Administrative Efficiency
several states now require fuel-use reporting for ah heavy trucks as an aid in the states'
enforcement efforts.
Compliance costs for weight distance taxes vary widely depending on several factors:
· Size of fleet (some fixed costs are high per truck for small fleets);
· Extent of automation twhich can reduce costs by an order of-magn~tude>;
· Type of operation (costs increase for firms with short trips and a variety of
configurations);
· Complexity of the tax (need to report configuration changes, etc.~;
· Thoroughness of the documentation required by the auditors; and
· Number of weight-distance tax states in which a carrier operates.
Several different approaches can be taken to estimate industry compliance costs for an
existing tax structure or for alternative tax structures. In many cases, more than one of the
following approaches may be appropriate:
1. Literature survey and interviews with selected experts;
2. Survey of firms;
3. Interviews with auditors; and
4. Audits of compliance procedures of selectee! firms.
Nearly ah previous studies have used variants of the first approach. One of the most
complete, but dated, efforts of this type was a 1983 AASHTO stucly,2 which estimated total
carrier compliance costs for all taxes, but which did not separate out costs for fuel taxes,
weight-distance taxes, and registration fees. This study estimated compliance costs to be
$60 to $750 (1983 clollars) per vehicle, varying primarily with the size of the firm.
Estimates of compliance costs were also developed as part of the Oregon WMT study. 3
These estimates are the only ones we know of that are based on a survey of motor carriers.
This study estimated that, for the Oregon weight-mile tax, compliance costs averaged
5.7 percent of tax payments, but varied from 2.6 percent for large firms to 7.S percent for
small and medium size firms. For a given level of auclidng, the compliance costs for the
weight-distance tax probably are not much higher than for fuel-use reporting. However,
since many states audit much less aggressively than Oregon (anct accept correspondingly
higher levels of evasion), many carriers experience appreciably lower compliance costs
than Nose estimated In the Oregon study.
2 Sydec, Inc., AASHTO Study of Motor Carrier Taxation and Registration Issues, prepared for the
American Association of State Highway and Transportation Officials, 1983.
3 Cambridge Systematics and Sydec with Pacific Rim Resources, Oregon Weight-Mile Tax Study,
Final Report, prepared for Me Oregon Legislative Revenue Office, the Oregon Public Utilities
Comoussion, and the Oregon Department of Transportation, February 1996, Chapter 4.
Cambridge Systen~atics, I?'c.
43
OCR for page 44
Alternatives to the Taxation of Heavy Vehicles
Applications Manual - Administrative Efficiency
A ~ . ~ _ ~ . - .
In inexpensive option for estlmatmg compliance costs is to update and adjust the results of
the compliance-cost estimates made In the 1983 AASHTO and 1996 Oregon WMT studies
and to augment them by Interviewing a few of the most knowledgeable professionads who
have done similar studies or who are specialized In related tax i.~.~u~ in the state or in the"
. . . ~ ~ ~
motor-caner industry. More accurate estimates of compliance costs for any particular
state's tax structure can be made bv interviewing a samnIe c)f firrn.~ a~ WA.C Bins in rho
Oregon WMT Study.
J con - ~
In the Oregon study, a total of 56 firms were interviewed - 17 small (operating fewer than
six vehicles), 18 medium size (operating 6 to 49 vehicles), and 21 large (operating 50 or
more vehicles). The 56 firms were selected to cover a representative set of carriers, In
consultation with industry representatives. The resulting distribution is summarized in the
table below:
Carriers Surveyed in Oregon WeighI-Mile Tax Study
Size
Motor Carrier Type Small Medium Large Total
Interstate 7 10 11 28
Intrastate 10 8 10 28
Private 5 6 4 15
Commercial 12 12 17 41
Truckload 5 5 9 19
Less-than-Truckload 0 3 5 8
Both 4 6 5 15
Log 6 3 0 9
Dump 2 2 2 6
-
Source: Cambricige Systematics and Sydec with Pacific Rim Resources, Technical Memorandum
No. 1- Compliance Costs of Oregon's Weight-Mile Tax, prepared for the Oregon
Legislative Revenue Office, the Oregon Public Utilities Commission, and me Oregon
Department of Transportation, Salem, Oregon, updated February 1996, p. 1-21.
Compliance costs estimated from the Oregon WMT survey are shown below:
Small Firms
Medium size Firms
Large Firms
Overall Compliance Costs
$207
$332
$25
Per-Truck1 Percent of Tax Payment
7.8%
7.8%
2.6%
5.7o/o
Per-truck costs are based on the. firm's entire fleet, Not just trucks operating in Oregon, and
therefore are not comparable among firm sizes. Most large firms have substantial operations
outside of Oregon that are not subject to the Oregon WMT and which do not entail any
corresponding compliance costs.
Source: Cambridge Systematics and Sydec win Pacific Rim Resources, Technical Memorandum
No. 1- Compliance Costs of Oregon's Weight-Mile Tax, prepared for the Oregon
Legislative Revenue Office, the Oregon Public Utilities Commission, and Me Oregon
Department of Transportation, Salem, Oregon, updated February 1996, p. 1-8.
44
Cambridge Systematics, Inc.
OCR for page 45
Alternatives to the Taxation of Heavy Vehicles
Applications Manual - Administrative Efficiency
A significant part of the difference in costs was found to be due to differences In the extent
to which firms used electronic recordkeeping systems to aid in tax reporting and related
functions. Electronic systems were used exclusively by 0 percent, 17 percent, and
19 percept of small, medium, and large firms, respectively; and some combination of
electronic and manual systems were used by 18 percent, 39 percent, and 72 percent of
small, medium, and large firms. Many firms had plans for adopting electronic systems, so
that compliance costs could be expected to be reduced somewhat.
- . . .
Experience in We Oregon study suggests that a better understanding of compliance costs
can be obtained by interviewing auclitors. They may not be able to aid significantly in
refining estimates that are obtained from a survey of firms, but they can usually describe in
detail the different types of recordkeeping systems that firms have and the procedures the
firms use in preparing tax reports and providing information for auditors, as well as the
types of equipment and services used and other related information. Such information can
be very useful in estimating how compliance costs are likely to change for different types of
carriers under tax options being evaluated.
The last approach to estimating compliance costs listed above is audits of the compliance
procedures used by a sample of firms. This approach probably has never been used in any
heavy-vehicle tax study; however, it probably is the only way of obtaining accurate cost
estimates, and it may be an appropriate subject for a future research project. Such a study
could produce information that would be useful in assessing the accuracy of compliance
cost data obtained from surveys of firms and in assessing potential ways in which
compliance costs could be reduced.
Audits of compliance procedures could be conducted in conjunction with routine audits for
highway user taxes, but would probably have to be on a voluntary basis. Thus, in order to
assure participation by a representative sample of firms, it would be desirable to pay for
each firm's cost for participating in the audit process. This would have Me added value of
encouraging the firms to actively help the auditor in developing recommendations for
improvements in tax administration that would reduce costs and increase accuracy In the
audit process.
Cambridge Systematics, Inc.
45
OCR for page 46
Alternatives to the Taxation of Heady Vehicles
Applications Manual - Administrative Efficiency
46
Cambridge Systematics, Inc.
Representative terms from entire chapter:
administrative efficiency
