The Punjab Revenue Authority: Meeting the challenges of a new institution

AuthorJames W. Douglas,Mohsin Bashir,Ringa Raudla
Published date01 May 2019
Date01 May 2019
The Punjab Revenue Authority: Meeting the challenges of a
new institution
Ringa Raudla
|Mohsin Bashir
|James W. Douglas
Tallinn University of Technology, Estonia
Lahore University of Management Sciences,
University of North Carolina at Charlotte,
James W. Douglas, Department of Political
Science & Public Administration, University of
North Carolina at Charlotte, 9202 University
City Blvd, Charlotte, NC 28223.
New institutions generally face many challenges that can inhibit their ability to succeed.
The institutionalist literature can serve as a guide, informing important actors of the
challenges they are likely to face when founding a new institution. We examine the
Punjab Revenue Authority (PRA) in Pakistan to assess the extent to which the chal-
lenges posited by the various streams of institutionalism surfaced as real problems that
leaders in Punjab Province had to deal with when establishing the PRA. We found that
rational choice institutionalism, historical institutionalism, and sociological institutional-
ism all identified problems that the PRA had to address. We conclude that the PRA's
early successes are a function of its ability to navigate these challenges effectively.
institutional change, new institutions, revenue authorities, semiautonomous revenue authorities
One of the major challenges that developing countries face is how to
improve tax administration (Devas, Delay, & Hubbard, 2001; Fjeldstad,
2003; Ohemeng & Owusu, 2015; von Haldenwang, von Schiller, &
Garcia, 2014; von Soest, 2007). One of the solutions that is increas-
ingly used in the developing country contexts is that of a (semi)auton-
omous revenue authority (SARA; see, e.g., Crandall, 2010; Devas et al.,
2001; Fjeldstad, 2003; von Haldenwang et al., 2014; Ohemeng &
Owusu, 2015; Taliercio, 2004a, 2004b; Therkildsen, 2004). The reve-
nue authority (RA) model entails removing revenue collection from
the finance ministry into an agency that has a certain degree of finan-
cial and functional autonomy (Ohemeng & Owusu, 2015; Taliercio,
2004a; von Haldenwang et al., 2014).
The proponents of this institu-
tional model argue that an autonomous RA would be able to offer
better incentives for its employees (e.g., more competitive salaries)
and have more flexible decisionmaking procedures and, through that,
increase revenue collection (Devas et al., 2001; Fjeldstad, 2003; von
Haldenwang et al., 2014; Taliercio, 2004; Therkildsen, 2004). SARAs
have been adopted in more than 50 countries (von Haldenwang
et al., 2014). The assessments of the performance of autonomous
revenue authorities have been mixed. Often, their establishment has
led to increased revenue collections (at least initially), but efforts to
root out corruption have been less successful (Devas et al., 2001;
Fjeldstad, 2003; Fjeldstad & Moore, 2009; von Haldenwang et al.,
2014; Therkildsen, 2004; von Soest, 2007).
The existing research on revenue authorities is largely atheoretical
(for exceptions, see Taliercio, 2004b, and Ohemeng & Owusu, 2015).
In this study, we systematically utilize the various streams of new
institutionalist research in political science to show how meeting the
challenges outlined by institutionalism contributed to the successes
of the Punjab Revenue Authority (PRA) in Pakistan. We, therefore,
demonstrate the potential usefulness of institutional theory as a guide
for designing institutions. This is important because new institutions
generally face many challenges that can inhibit their effectiveness
and because ignorance of the tenets of institutional theory by
reformers can result in the creation of flawed institutions. Further-
more, we show that in order to assess institutional design, it would
be insightful to combine different streams of institutionalist research
(rational choice, historical, and sociological). Existing studies tend to
zoom in on one stream of institutionalism only. However, the different
strands of institutionalism can shed light on different aspects of insti-
tutional design, and hence, combining the analytical lenses allowsus to
provide a more comprehensive framework for capturing the major
challenges a new institution is likely to face.
Unlike fully autonomous agencies (such as central banks), SARAs have limited
competencies regarding policy formulation (von Haldenwang et al., 2014).
Received: 3 February 2018 Revised: 8 December 2018 Accepted: 12 December 2018
DOI: 10.1002/pad.1845
78 © 2019 John Wiley & Sons, Ltd. Public Admin Dev. 2019;

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