A few days ago, I had the luck and the honor of moderating a round table at the 53rd General Assembly of CIAT, on strategies to retain talent in the tax administrations. It was attended by Mara Vieira, of the Receita Federal de Brasil; Michael Snaauw of the Canadian Revenue Agency – CRA; Jean Marc Niel of the Direction Générale des Finances Publiques – DGFIP of France, representing the CREDAF; Judith Smith-Richards of the Tax Administration of Jamaica – TAJ; and, Hugo Juárez of the Servicio de Administración Tributaria – SAT of Mexico.

The panel began with a set of four small questions to all participants in the roundtable, which allowed us to know, as a starting point, about the current management system of human resources in each tax administration. The questions revolved around the following topics:

The mechanism of incorporation and recruitment of new people.

There is no common standard when incorporating new staff. Situations are very different: In Brazil, candidates enter only by public exams[1] , open to all kinds of professionals, with thousands of candidates who face tests on different subjects, including general and specific, from which they will select those who objectively have highest scores. In Spain, the selection process can take four years and candidates “sing” from memory some of the issues that had to prepare for the process. Some countries have internal competitions to facilitate internal progression. Some countries have a more flexible process, such as the Netherlands, aimed at attracting people with specific profiles, where interviews with candidates are extremely relevant.

If there is any variable component in the remuneration of officials?

This issue may cause theoretical and ideological discussions. On the one hand, those who argue that the tax administration officials are like any public official and, therefore, no additional compensation of their salary is neither necessary nor desirable. On the other hand, those who argue that the administration productivity will benefit significantly if the remuneration of officials is at least partly determined by its own effectiveness, based on the achievement of results or compliance with agreed targets .

The positions vary among member countries, with governments such as Canada, where there is no variable component; the Spanish, in which there is a very important variable component associated with the achievement of individual goals. Some administrations have compliance bonds of a general nature, distributed when the tax administration, as a whole, exceeds the revenue goals. How to determine the variable component in an objective manner is always complex: deterministic methods associated with the amounts collected, specific adjustments, or the collection of overdue debts are not applicable to all jobs in the organization. They do not always reflect the effort or the quality of work, for example, increases in revenue may come from pure economic growth, and nothing can adjust the tax auditor who has the “luck” of controlling a compliant taxpayer, and it is very difficult to charge the dead.

Setting individual quantitative goals is a demanding task and is far from perfect, for example, to associate the goals to the number of cases treated or the reduction of the time used for repetitive procedures may undermine the quality of service delivery. In addition, negotiating them individually with each staff member can always open the door to rewarding, not the most dedicated and effective official, but the one who best negotiates his goals.

What is the expectation of the length of time in which an official should stay in the tax administration?

One issue to address in a discussion on the retention of human talent is the expectation of permanence in the administration of officials who join it. In this case, the unanimous conclusion, I would say, is that officials who join the tax administration consider a long-term career, even looking at retirement.

The process for dismissing an official with a behavior or level much lower than the desirable performance.

There are certainly, within administrations, officials with a performance significantly below the expected level. There are mechanisms to lay off these officials. Those are complex mechanisms that are rarely used. In some places, it may be difficult to fill a vacant position due to the need to initiate a broad public contest. In others, it is possible and even probable, that the agent could start a judicial process that will take years and will end with a mandate to the administration to reinstate the agent with the added bonus of receiving the wages he would have received, despite not having worked. Paraphrasing Judith in the panel, administrations keep trying and trying to improve the agents’ productivity and behavior or seek a transfer to another area where the agent has the opportunity to develop a career.

The round table continued with Judith telling the significant efforts of the TAJ to improve the quality of life of officials, seeking their personal development, supporting family life, participating in sports and other unconventional actions.

In the Canadian Agency, Michael told us, half the resignations of officials are attributed to a poor relationship with their immediate supervisor. With him, we commented on the importance of this relationship, the need for appropriate mechanisms for escalating difficulties to find solutions, and provide training to supervisors and tools for the exercise of this function.

With Jean Marc, we talked about a kind of risk that exists particularly in countries with relatively lower income levels, of losing the better skilled and trained officials who migrate to the private sector, in sensitive areas such as transfer pricing, treatment of administrative appeals or technological development. Jean Marc shared with us the strategies that several member countries of CREDAF have about it and can concentrate on the provision of tools, the ability to achieve personal achievements, the development of the spirit of belonging and the opportunity to contribute to the development of the country.

With Mara, we reviewed the possibility of teleworking that the Federal Revenue Secretariat recently explored, allowing people who choose this option to improve their quality of life, avoiding long commutes to the office and enjoying a more flexible schedule, in return for the counterpart of higher productivity than colleagues working at the office.

In the final minutes, I raised the question that gives rise to the title of this post. And no, I’m not referring to the 2004 Alex Proyas’ movie “I, Robot“[2], with the participation of Will Smith, nor the album[3] that, still in the era of vinyl, was released by the British group “The Alan Parsons Project”.

I started commenting on how there are decisions, perhaps small for the time being, within the tax administration, that are taken by an information system without any human intervention. I mentioned a simple but obvious example: a computer system is in charge of managing appointments for personal assistance in most of our administrations, which decides whether a taxpayer arrives at 9:15 am on a Thursday without intervention of any human being. The example could be more complex, such as the granting of a payment agreement or a tax refund with relatively small amounts. I continued, trying to be a little provocative, with a brief discussion about how increasingly we rely on applications that assist us when driving, indicating the best route to our destination. Some attendees confirmed, nodding their head silently, that sometimes we accept the path that suggests the application even if we know and repeat the road perfectly and frequently, as the one that takes us back home after work. At the end of the day, we know that if the application leads us down an unusual path, it is probably because there is a heavy traffic on our usual route, or there was an accident or some street is temporarily closed.

With that background I launched my question “When do we imagine that the tax authorities would “hire” a robot as a tax inspector?”

That sort of fascination with artificial intelligence and robots we, as a species, obviously have is not new. We can remember the almost cartoonish metallic character of Irwin Allen’s “Lost in Space”[4] with its constant evocation of “danger, danger“; novels[5] from Asimov in the 50; or the fearful and antagonistic characters in Terminator with the laconic “hasta la vista, baby.”[6] Sometimes in these works of fiction, robots are inevitably destined to the grim fate of rebelling against their creators to destroy them (nothing good for tax administrators here). Usually, yes, they are designed at the image and likeness of their creators, humans: bipedal objects with limbs, trunk and head, as illustrated on the cover of that Alan Parsons[7] album, with the ability to develop very human feelings as the affinity and preference of the Robot with Will Robinson or Robin Williams’ character with their adoptive family in Bicentennial Man[8] . This fascination has led us[9] to imagine robots sometimes so similar to humans that they do not know their true condition, as the “final five”[10]  cylons of Battlestar Galactica .

Today, however, we live in the times of Siri, Alexa and Cortana. The last time a human defeated a specialized computer in a game of chess was more than a decade ago, and some years since Watson managed[11] to defeat without major problems the champions at the Jeopardy game. It is clear that the possibility of artificial intelligence auditing taxpayers is getting closer. In the end, as Michael told us, tax auditing is the verification of the right application of a set of established rules, using and contrasting enormous amounts of data for that verification. Things where computers are very effective and efficient.

In my opinion, this development will take place in small increments rather large discrete jumps. Increasingly supporting processes in information systems, making things interoperable, and applying artificial intelligence techniques in intermediate steps, first to support decision-making in increasingly complex things. I do not see bipedal robotic mannequins visiting taxpayers; I think the shape that these robots will take will get them closer in their physical appearance to the legendary “MU-TH-UR 6000“, the mother system of Alien. They will be there to help us managing the administration, doing many things, interacting with many taxpayers. This will leave time for humans, not to hibernate but to take over the difficult and rare, things that require thinking. Several administrations are already testing chatbots for taxpayer assistance. Gradually these trials will extend to the assistance to auditors and there we go.

About robots, the consensus was no, not yet, and therefore, fortunately, I won’t finish this post quoting the first verse of that song from the band Styx: “Domo Arigato misutā Robotto“[12]

The roundtable was dynamic and rich in exchange of experiences and opinions. The discussion was enriching and funny. Therefore, I conclude by quoting another verse from another song, which applies to everyone who missed the Assamble, not just for those who missed the round table. A quote from Cuban singer Emilio Frias, from the orchestra El Niño y la verdad, “Si no viniste, si no viniste…. ay tú te lo perdiste.”[13]

Greetings and luck.

[1] see https://www.concursosnobrasil.com.br/concursos/br/concurso-receita-federal-20182019.html

[2] https://www.imdb.com/title/tt0343818/

[3] https://en.wikipedia.org/wiki/I_Robot_(album)

[4] Wikipedia entry on the series Lost in Space

[5] Wikipedia entry about the novel I, Robot by Isaac Asimov

[6] https://www.youtube.com/watch?v=LRxaXmXvjnU

[7] Cover image of I, Robot by The Alan Parsons Project.

[8] Wikipedia entry about the film Bicentenial Man 1993

[9] https://en.battlestarwikiclone.org/wiki/Final_Five

[10] https://en.battlestarwikiclone.org/wiki/Final_Five

[11] https://www.youtube.com/watch?v=P18EdAKuC1U

[12] Thank you very much Mr. Roboto. ど う も あ り が と う ミ ス タ ー ロ ボ ッ ト

[13] “If you did not come, if you did not come …. Oh, well, you missed it. ” https://www.youtube.com/watch?v=U_ud-PABjCA

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