By DAVID MANGURIAN

Since the program began in 1991, that country's tax revenues increased from 4.9 percent of GDP to 14 percent. Income tax returns filed have jumped from 200,000 to 630,000 last year, and total revenues are up a whopping $5 billion, more than double 1991 revenues. The cost of the program to date: a paltry $7.2 million.

In achieving these results, the IDB program had a partner in the International Monetary Fund, which set revenue targets, and in the Peruvian government, which strongly supported the changes both institutions were recommending, according to Luisa Rains, chief of the IDB's Fiscal Division.

One key aim of the program was improved tax collection. The system was simplified, reducing the number of taxes collected from 180 to just five. Every taxpayer was given a single identification number. More than 1,100 employees of SUNAT, the national tax administration, received training. All employees had to take an ethics seminar, and salaries were raised from an average of $50 a month to more than $890 a month.

Before 1991 the government offered virtually no taxpayer assistance. SUNAT has since opened seven large taxpayer assistance "plazas" in Lima and other cities and 15 smaller centers in towns.

Another objective was to crack down hard on tax evaders. Last year alone, SUNAT temporarily closed more than 11,000 businesses for not complying with the tax code.

In return for getting tough, SUNAT got respect. In a 1995 poll on corruption in Peruvian government agencies, only 1.3 percent of the respondents said they considered SUNAT corrupt. A 1997 poll ranked SUNAT as the "most efficient" of all public and private Peruvian institutions.

Since 1988, the IDB has provided $750 million for tax modernization programs in 21 countries. "The programs don't just help countries increase revenues," says the IDB's Rains. "They produce sustainable revenues that make it possible for governments to improve budgeting and planning and achieve their development goals."