Introduction. Colombia is facing a fiscal situation featuring large and probably unsustainable projected deficits. The solution will almost certainly involve some combination of increased tax revenues and decreased expenditures. Tax revenue increases can come from either raising the rates or expanding the bases of existing taxes, introducing new taxes, or increasing the effectiveness of how existing taxes are enforced. In this sense, tax rate increases and enforcement increases are substitutes. In determining the proper mix of policy, the standard tools of public finance can have much to say. Even in the absence of a fiscal crisis, tax administration is worthy of study. The impact of a country’s tax laws and regulations as written are intermediated by the extent to which the laws are enforced and the tax liabilities on the books are actually collected. Inefficiencies in the administration and enforcement of tax laws can lead to inequity and inefficiency just as can inadvisable tax laws. In assessing the state of Colombian tax administration, it is critical that the shortterm revenue exigencies not lead to short-term fixes that are inimical to good tax administration. Colombia has not always resisted this path, as exemplified by the history of tax amnesties that bring in some tax that might not have been voluntarily remitted, but also undermine the incentive to voluntarily comply in the long run. The proper long-run perspective must consider that the environment in which the Colombian tax system operates is changing due to the increasing integration of the Colombian economy in to the world economy and innovations in information technology. Each of these changes poses challenges to the operation of the tax administration.
