Why is performance of the tax administration measured by realization of state budget rather than by reduction of tax evasion?

This question touches on a fundamental aspect of the fiscal system, where formal priorities, administrative practices, and political interests play a decisive role.

In countries like Albania, where the tax administration is part of the state mechanism for revenue collection, the focus on the budget is not accidental but stems from a set of structural, methodological, and political reasons.
Let us examine this issue step by step, turning it into a connected narrative that highlights the contrast between the two approaches.

First, we must understand that the main objective of the tax administration, according to law and its mandate, is the collection of the revenues planned in the state budget. The annual fiscal budget serves as the central plan of public finances, and taxes are the primary tool for securing the funds necessary for state expenditures. Thus, the administration’s performance is traditionally assessed through the key indicator: what percentage of the budget plan was achieved?
This is a direct and measurable indicator, closely tied to the government’s success in managing public finances.

On the other hand, tax evasion, meaning the avoidance of paying taxes is not an official indicator in the administration’s internal KPIs (Key Performance Indicators). Why?
Because evasion is difficult to measure, requires complex and independent analytical models, and often exposes weaknesses in the fiscal system, such as gaps in legislation or potential corruption. If the administration were to include it as a primary metric, it would have to publicly acknowledge its own shortcomings—something that is not always desirable.

This leads us to the second challenge. Evasion cannot be measured accurately and annually in the same way the budget can. To assess evasion, deep macroeconomic analyses are required, such as calculating the VAT gap, comparing real consumption with tax declarations, using input–output models that examine production chains, or sectoral studies on economic informality. These methods, developed by institutions like the European Union and the OECD, require extensive data, specialized expertise, and significant time.
In Albania, these assessments either do not exist, are published rarely, or are not directly linked to the performance evaluation of the administration’s leadership. As a result, there is no regular mechanism for monitoring the reduction of evasion, unlike the monthly or annual budget reports, which are rapid and based on concrete figures.

From a practical and political standpoint, budget realization is far more advantageous. Governments prefer communicating simple successes like “we achieved 102% of the budget plan,” rather than discussing a reduction of evasion by 3 percentage points according to a complex model.
Budget measurement is precise, revenues are countable and verifiable in real time, and the message is easily communicated to the public. In contrast, evasion is a delayed, debatable indicator that often reveals structural problems such as corruption or deficiencies in the control system. This makes it much less appealing for politicians, who prefer indicators that highlight achievements without exposing failures.

Another critical reason is that the budget can be fulfilled without reducing evasion, thus distorting the reality of actual performance. The administration can increase revenues by raising indirect taxes, shifting the burden onto regular and compliant taxpayers, performing more aggressive inspections on small businesses, implementing indicative wages or presumptive taxation (such as in tourism), imposing higher penalties, or simply benefiting from economic growth and inflation, which automatically generate more VAT revenue.
In these cases, the budget is fulfilled, but evasion remains unchanged; those who already pay are burdened further, while large evaders avoid consequences. This creates an illusion of success where performance appears high, yet the fiscal system becomes neither fairer nor more efficient.

Lack of transparency also plays a major role.
In many EU countries, reports on the VAT gap, national tax gap, or social contribution gap are published regularly, becoming core KPIs for the tax administration. These documents create accountability and drive reforms.
In Albania, evasion measurements are not published regularly, are not tied to managerial performance, and do not serve as a control mechanism. Without such indicators, there is no real measurement; without measurement, there is no real accountability.

Moreover, measuring evasion would reduce the room for political maneuvering.
If a state officially acknowledges the level of evasion, its distribution, and the reasons it remains high, it is then obligated to undertake real reforms, such as full process digitalization, chain control of transactions, property reform, or effective fiscalization. This generates public pressure and requires transparency, which is not always in the interest of the government.
By not measuring it, the problem remains in a fog, allowing the status quo to continue without substantial intervention.

Ultimately, reducing evasion requires reforms that affect powerful interests: major economic actors, entrenched business practices, or rural and urban areas where informality is embedded in the economic culture. Meanwhile, budget realization can be achieved without altering any structural element, maintaining focus on short-term results. In conclusion, the tax administration is not measured by evasion reduction because the budget is a direct political interest, whereas evasion requires a level of transparency that is not advantageous to those in power. Evasion is difficult to measure and is not part of formal KPIs, while the budget allows achievements without genuinely reducing tax avoidance.
From a systemic perspective, measuring evasion means acknowledging the problem, an act that requires political courage. Ideally, performance should be tied to reducing the tax gap, as done by EU and OECD standards, to create a fairer and more efficient system.Then we can move from the illusion of budget fulfillment to the reality of a true fight against evasion.