A toolkit recently released by Asian Development Bank (ADB) has recommended a simple strategy for effective implementation of information and computer technology (ICT) by tax administrations while citing a few cases of innovations in certain developed countries such as Denmark, Finland, Australia and South Korea.
The key elements of the strategy are: Understand the administration's computerization priorities and focus ICT investments on these priorities; review existing work processes, where necessary, to simplify ICT implementation and maximize investments; institute strong governance structures and know when to stop investing in areas where returns are becoming increasingly marginal; start small and implement full-scale only as the realization of potential benefits becomes more certain; and leverage innovation to harness appropriate technologies to resolve operational problems, rather than pursue technological leadership.
Captioned 'Tool Kit for Tax Administration Management Information System', the 84-page document has been developed to help policymakers and tax administrators in undertaking a holistic transformation of tax administration in their respective agencies by implementing Tax MIS.
It says: "A tax agency can use this tool kit based on its level of maturity in Tax MIS implementation. The tool kit also refers to key lessons learned from select cases of Tax MIS implementation around the world."
As regards innovations, it has cited Denmark's e-Income Initiative that provides for sharing of taxpayers' data with other Government agencies in provision of social security benefits, subsidies, unemployment benefit, etc.
The Toolkit says: "Denmark's e-Income Initiative is a system centered on a major record or file that includes all the information that is normally shown on a payment slip. But the system does not just cover wage income; it covers all kind of personal payments with the exception of capital income. This means that it also contains information on social benefits, pensions, and student grants, among other sources of income. Apart from this, it also includes specific information on hours, wage rate, holiday allowances, maternity pay, relevant periods of work, and a production unit number to signal where a person is working to make an automatic calculation of the transport tax deduction. The information in e-Income Initiative records can be delivered online and filtered through many different modes of service delivery."
It adds: "No private sector bodies have yet been given access to income data or annual statement data. But access to employee's tax card data, on the other hand, is working well for private sector bodies as all employers have access to their employees' tax card data. For other bodies, the plan is that the data will eventually be accessible to all financial sector bodies (e.g., banks and mortgage institutions, etc.) if granted access by the individual taxpayer."
Among other notable initiatives discussed in the Toolkit are: Finland's pre-filled tax proposals that has already reduced the compliance burden of millions of taxpayers; Australia's Mobile Portal Access under which Australian Tax Office (ATO) provides USB stick that contains modified signing software and digital certificate that enables the taxpayers to log in to ATO online service from any computer.
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