Chapter 4 | Page 161 A number of policy and institutional reforms are required to optimise tax administration. These include: strengthening tax institutions, formalising as much of the informal economy as possible, reducing tax avoidance and evasion, reducing tax exemptions, and increasing direct taxes.97 Building further administrative capacity of the tax authorities, putting in place clear laws and regulations and taxpayer protection systems, and eliminating exceptions can also make the overall tax system more efficient.98 The composition of a broad-based taxation system is another important policy option for developing countries in which the resource-base is narrower. However, opinions differ among economists and policymakers on the types and levels of taxation that are appropriate, particularly in relation to their short-term and long-term impacts on overall government revenue and the extent to which they ensure ‘higher yet more just taxation’.99 Another important aspect of taxation policy is the need to have the policy aligned with cyclical economic fluctuations. This is relevant from a human rights perspective since economic downturns may have disproportionately negative impacts on the poorest members of the society. Suggestions for government actions to minimise the negative impact of economic downturns include the creation of reserve funds that can be used to maintain spending during bad times.100 Introduction of stimulus programmes are also often essential during economic downturns in order to maintain the level of human rights enjoyment. Such measures could help maintain a more equitable society during difficult times, instead of cutting taxes for the rich.101 4.3.2.2 Tax efficiency and compliance enforcement One of the foremost challenges to overall tax efficiency is the maintenance of a strong set of enforcement and compliance procedures. The tax literature identifies a number of weaknesses in tax administration and governance in 97 Itriago, above n 18, 7. 98 International Monetary Fund, above n 14. 99 Balakrishnan, Elson and Patel, above n 56, 34. 100 Balakrishnan et al, above n 53, 13. 101 Ibid.