Order an Uber, book an Airbnb, reserve a restaurant table, pay your bills, buy that book your colleague just recommended—it seems nearly everything can be done with a smartphone in mere minutes nowadays. And as the large platform companies, like Amazon and Apple, that provide these products and services continue to condition customers to expect convenience and efficiency, taxpayers are looking to their tax authorities for the same types of experiences.
Tax administrations that we work with have been investing in automation and other digital technologies for quite a while, but now the capabilities of technology combined with the digital expectations of taxpayers are beginning to challenge tax agencies’ existing organization structures.
Digital platforms are evolving but are tax administrations?
Digital platforms are increasingly complex ecosystems. E-commerce platforms are becoming media companies and offering banking services. Through advanced analytics and machine learning, private sector companies are personalizing customers’ experiences, recommending products and services based on their customers’ interactions with them and their third-party partners. These companies are becoming more efficient and agile as they integrate procurement, manufacturing and logistics within their supply chain. Everything is automated and focused on improving customer interactions and loyalty.
While tax administrations around the world have automated services like filing tax returns online, data checks and call center response, I’m aware that many have not taken advantage of the potential productivity boost and cost savings enabled by new technologies such as artificial intelligence.
Accenture’s 2017 Global Taxpayer Survey, which explored the experiences, attitudes and expectations of citizens from 12 countries, found that almost two-thirds of taxpayers report a positive attitude toward their tax authority; however, they desire more digital services, paperless correspondence and more seamless, personalized experiences. More than one-third are used to using artificial intelligence-enabled services from the private sector in everyday life. These statistics are significantly more pronounced among younger generations, those digital natives for whom submitting paper forms and waiting weeks for a response is almost unheard of.
Large economies lose billions in tax revenue each year due to avoidable errors made by taxpayers. The UK alone loses £8 billion a year. Thousands of little mistakes become a significant burden on revenue agencies and taxpayers. Math errors and misunderstood information and form fields are the most common errors found before, during and after submission.
Younger people, the least knowledgeable about managing taxes, submit the most errors and would benefit most from digitally-enabled services, especially as more and more young people work in the digital, or gig, economy. In our research, taxpayers have said automated validation, live chat services and short informational videos would help reduce errors. I believe that a system that educates taxpayers, simplifies and personalizes their experience will not only improve their sentiment towards tax authorities and improve voluntary reporting, but tax authorities can also mitigate costs and inefficiencies caused by errors.
In my next blog I will discuss the ways that revenue agencies can create a seamless, customer-centric experience to achieve those aims. In the meantime, you can read more on revenue agency trends here.
This article was originally published as part of the 2018 IOTA book “Impact of Digitalisation on the Transformation of Tax Administrations”.