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Trust is essential to revenue agency success. Tax Administrations expect honesty and integrity from taxpayers; if they do not uphold such values they will lose citizens’ confidence. Safely-guarded and fairly-used data is key to that integrity in the 21st century.
The explosion in the amount of data available to agencies leads to many more possibilities to automate compliance and service activities. However, such automation could be accompanied by an increase in errors, flaws, and false assumptions if data is not exploited accurately. Misuse – deliberate or accidental – would be even more damaging. The recent example of Facebook and Cambridge Analytica’s use of millions of Facebook users’ personal data to influence voting is one such example of the loss of trust. If revenue agencies find themselves treading a similar path (for example, by using data in an unfair or inappropriate manner) the impact on public confidence would be profound.
That’s why data veracity is one of the five game-changing technology trends explored in our Technology Vision 2018. Add to these high stakes the ubiquity of data and it’s easy to see why 81 percent of tax agencies agree that organizations are ‘increasingly using data to drive critical and automated decision-making, at an unprecedented scale.’ As a result, securing data veracity becomes critical and agencies must respond quickly to rethink how they manage and govern data.
The future is data-led
We estimate that in five to 10 years, revenue agencies will process 100 times more data than their paper and telephone-based predecessors. They will increasingly tap into external data sources – commercial or tax partners – and internet traffic will also balloon, as a result of online user interaction. In 2015, the Australian Tax Office published its program blueprint, which outlines its plan to build a full set of integrated, data-driven digital solutions by 2020. And it’s not alone: others, including the so-called Digital 5 (the UK, South Korea, Estonia, Israel and New Zealand), have similar agendas.
More and better data presents huge opportunities for tax agencies to gain insights into increasingly complex global transactions and to engage better with citizens. The IRAS in Singapore, for instance, was recently credited with using data analytics to uncover S$1.8 billion in taxes and penalties over five years.
But that future brings new risks
However, it’s not difficult to see how mistakes can happen when dealing with reams of data across multiple sources – especially when agencies are ill-prepared. According to Accenture’s Technology Vision research:
- The majority of tax agency respondents (85 percent) agree that organizations are basing their most critical systems and strategies on data, yet many have not invested in the capabilities to verify the truth within it.
- Most are confident in the integrity of the sources of the data that their organization collects and uses, but over a third (35 percent) think there is a lot more they could do to ensure data quality (and 12 percent rely solely on trust, and don’t verify their main data sources at all).
- Nearly a quarter (the highest proportion of respondents to the question) say their organization has likely been the target of adversarial artificial intelligence, such as ‘bot’ fraud, spoofed sensor data, and falsified location data, but have been unable to verify it.
- Most (88 percent) agree that automated systems create new risks, including fake data, data manipulation, and inherent bias; and 69 percent agree that most organizations are not prepared to confront corrupted insights as falsified data infiltrates their information systems.
No time to lose
Stronger emphasis on data is critical to the future viability of revenue agencies. Systems that once simply had to record and hold taxpayer accounts, returns, historical data, forms and information resources must now cover engagement with citizens (user-centric taxpayer interactions) and insights (predictive analytics). And data integrity underpins it all. Agencies will routinely capture and retain data of differing veracity. Managing the correct application of all forms of data to support automation is critical to preserving confidence in Revenue administration.
Alongside the opportunities of a data-driven world come new threats to trust. Revenue agencies recognize the risks: 42 percent of the tax agency respondents to the Technology Vision research strongly agree that “as organizations rely on data-driven decisions, the issue of data integrity will grow exponentially,” and 88 percent agreed overall. Only defense and national security agencies returned a higher score (45 percent).
Data is already being stored and managed in vast and rapidly growing quantities. Assuring and securing its veracity must already be central to all tax agencies’ data decision-making.