The greater the number of different kinds of taxes levied by an administration the higher will be the administrative costs of collecting a given amount of revenue, other things being equal. This proposition is based on the idea that there are economies of scale in tax administration. By concentrating efforts on a smaller range of taxes, tax administrations can achieve greater specialisation and thereby keep down costs. Choice of tax base. The base on which a tax is levied affects collection costs.
Some bases are very simple.
Immovable property for example is comparatively easy to identify and record with the result that property taxes can be collected comparatively easily once a system of property registration is in place. From an administrative perspective, the tax liability will ideally be based on a straightforward indicator such as floor area or volume. A need to put a valuation on a property can, however, quickly complicate matters. For then a valuer is needed, properties may need to be visited and the way is open for taxpayers to challenge what may be a subjective assessment of the base on which tax will be levied. Income' for example is a notion that can become difficult to define precisely for administrative purposes.