CHAPTER 7
The Tax and Technology Challenge Moyo Arewa and Stephen Davenport
The Tax and Technology Challenge Tax administration is inherently data-intensive, and digitalization has enormous potential to enhance various administrative functions, including the collection, sharing, and use of tax information. Investments in information technology (IT) are thus a central component of many tax reform efforts, and so technology is a central theme of this report. This chapter explores the promise and limitations of digital technologies in greater detail and how revenue authorities use these technologies to address critical gaps in enforcement, facilitation, and trust. Tax administration tends to be laborious for both taxpayers and tax officials. It often involves face-to-face interactions, the use of manual systems for administration, inadequate human and technical resources, rigid bureaucracy, and insufficient access to or use of data for enforcement and tax compliance purposes. These factors ultimately result in high enforcement and tax compliance costs and therefore relatively high levels of tax noncompliance, fraud, evasion, and avoidance (Okunogbe and Pouliquen 2018). Digital technologies can, in theory, alleviate many of these challenges. For that reason, countries have invested heavily in technological systems and platforms, including taxpayer portals, automation, integrated databases, e-filing/ returns systems, and e-payment platforms (Awasthi et al. 2019; Bird and Zolt 2008; Gupta et al. 2017; Moore 2020; Okunogbe and Pouliquen 2018).
The Tax and Technology Challenge
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