Information Technology And Innovation In Tax Administration

The role which information technology should play in the tax reform process is a subject of considerable debate. Installing computers and writing software to assist the tax administration is no substitute for political will, along with sound assessment and enforcement procedures, which are the critical elements for enhancing taxpayer compliance. Without these hey ingredients in place, computerization can easily serve as a way to absorb technical assistance, and camouflage the fact that little or no fundamental progress is being made on the reform. If the essential political, legal and administrative elements for tax reform are being put in place, then modern information technology can be a powerful tool to enhance the capabilities of the reformed system. The chapters in this volume by Lasheras and Menendez-Ros (Spain), Gil-Diaz (Mexico), and Marshall (Canada) all describe tax reform programs where modern information technology systems were introduced. In the cases of Spain and Mexico, comprehensive tax reforms were implemented covering the legal and administrative aspects of all the tax systems, from income tax to customs. In Canada, the conversion of the antiquated federal manufacturing sales tax system into a comprehensive value added tax was accompanied by a complete reorganization of the tax administration and the introduction of modern information technology into the administration of indirect taxes.