Something more than technology …
From the OECD’s most recent report on the Tax Administrations, [1] I recapture three aspects worth noting in the countries analyzed:
With respect to the use of technology, Juan Francisco Redondo Sánchez[2] referred to the “LINDAS” Tax Administrations as those that show a flashy attention toward the fashionable technological concepts, while there still persist many of the traditional problems to which they pay no attention because they are “outmoded”. He expressed his concern because some of the remedies applied are not very effective for solving such problems as informality.
In my opinion, and coinciding with Juan Francisco, technological advances are not sufficient if they do not go hand-in-hand with the irrenounceable decision to eliminate fraud. Otherwise, they could simply be a camouflage to disguise inefficiency or the lack of political decision.
On the other hand, the aging of the administration’s working staff in many cases could lead to the technological obsolescence of the means and systems available in the market, which currently provide service and contribute to detect clues, evidence, testimonies of noncompliance as well as to predict behaviors.
The maintenance of the aged staff is allowed in the administrations when they show high efficiency in compliance with their objective. However, such coincidence is rarely seen and the results are obvious: unnecessary or redundant manual processes with relative collection efficiency.
As for the high levels of debt pending collection, highlighted in the OECD’s report, it is known that the administration’s dissuasive action is incomplete without the recovery of the credits detected by the processes, with or without technological support, when the administration’s effectiveness area determines them as delinquent or lost. Likewise, when they are obtained from excise tax collection or withholding that allow for presuming the delinquent use of the funds by those who collect or withhold them.
In general, the administrations undertake the collection of delinquent balances by means of slow and complex judicial actions carried out by the administration or other State institutions, which are many times based on obsolete processes without the necessary managerial control. It is perhaps in this context where one finds the slowest of the processes wherein the technology does not find a way for moving forward.
The uncontrolled increase of noncompliance generates incredible bottlenecks in administrative as well as judicial management. There are only a few countries that have administrations empowered to undertake direct executive action for collecting debts. The majority seek support in law issues so as not to favor its inclusion in the codes.
When a debt is firmly recognized by the debtor, nothing should prevent its direct execution by the administration. Such is the case of debts resulting from returns filed on time and not paid, as well as those resolved by the judicial branch in favor of the Administration.
Although coercive powers are not always appropriately used, their availability allows for better managing the recovery of credit, instead of having to resort to the Justice Courts.
To sum up, the OECD’s analysis leads me to think that the current problem of the administrations is not so much in the lack or underutilization of technological supports, to provide assistance in voluntary compliance and the detection of noncompliance evidence by aging staff, but rather in the powers granted by the law for the coercive execution and mainly in the decision and effective management for recovering the delinquent credit resulting therefrom.
[1] OECD, TAX ADMINISTRATION 2017, COMPARATIVE INFORMATION ON OECD AND OTHER ADVANCED AND EMERGING ECONOMIES.
[2] Juan Francisco Redondo Sánchez, “LINDAS” Tax Administrations, CIAT Blog, May 1, 2019
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