Canada leads the pack in E-government

Canada’s advances in e-filing are part of a much larger eGovernment program that embraces everything from revenue and customs to immigration. But there are still lessons to be learned from other countries

By Alden Cuddihey and Graeme Gordon

*This article is an expanded version of a summary that appeared in the January/February 2005 issue of CAmagazine.

For many Canadians, online tax filing has become as familiar as automatic banking machines. In 2003, a full 43 per cent of tax returns were filed using the Canada Revenue Agency’s automated systems. But far fewer Canadians are aware of the extent to which the federal government has built up its overall eGovernment services. In fact, Canada has been rated no. 1 for the past four years on Accenture’s annual e-Government leadership survey.

The survey, first launched in 2000, is meant to uncover trends on the international eGovernment landscape and promote examples of innovative practices. Governments can use this information to provide better service to their citizens while maximizing the cost savings inherent in eGovernment applications.

According to the 2004 study, “eGovernment Leadership: High Performance, Maximum Value,” Canada not only secured the top spot in a list of 22 countries, but also increased its lead over the rest of the world, including Singapore and the United States.

Canada’s ranking can undoubtedly be credited to its focus on self-examination and pursuit of user feedback. The federal government has realized that providing services online is not an end unto itself, but part of a much longer and larger journey – one that involves rethinking how the government and its agencies deliver services and interact with businesses, communities and citizens.

The goal for the Canadian Government On-Line program is to be known around the world as the government most connected to its citizens, with citizens able to access all government information and services online at the time and place of their choosing.

Canada leads innovations across five government agencies: revenue and customs, postal, human services, immigration, justice and security, and education. Here we will concentrate on revenue and customs – the first area of focus for many global government online programs.

Revenue and Customs: New models to better delivery
In the Accenture study, government revenue agencies continued to be the most mature industry segment. This isn’t surprising, given that governments worldwide are facing fundamental change on an unprecedented scale and at an accelerated pace.

Heightened service expectations, budgetary pressures, commerce without borders and myriad other factors are forcing governments to examine new business models that will help them gain a better knowledge of their taxpayer base, including their needs and motivations and generate a lower-cost operating model.

Because revenue and customs agencies touch such a broad base of both citizens and businesses, the elimination of low-value manual processes can have a profound impact – allowing agencies to focus on the bigger challenges of enforcing compliance and improving service delivery.

For example, in the US, more than 2.4 million taxpayers filed online in 2003. If numbers like these continue, Internal Revenue Service (IRS) officials believe the agency could close a returns facility and could free up enough resources to hire as many as 2,200 IRS investigators.

Canada
The Canada Revenue Agency (CRA: www.ccra-adrc.gc.ca/menu-e.html) has transformed the way services are delivered within the Canadian government. The agency has been steadily moving away from paper-based transactions that require manual processing toward automated transactions that can be submitted, verified and processed by computer systems.

The CRA laid the groundwork for electronic filing about 10 years ago when it revised the manual process that it had been using to input and verify personal income tax returns. Now, because of the steady growth in e-filing, the agency has closed one of its taxation data centres and has redistributed or redeployed about 1,350 of the jobs formerly required to process paper returns.

Although Canada’s CRA is the leader of the pack in revenue and customs online, there are other lessons to be learned from government revenue agencies around the world.

Australia
The Australian Taxation Office provides a full tax service for businesses and tax agents that allows for paying business returns online, transferring balances between accounts, requesting refunds, viewing tax accounts in detail and paying obligations (https://bp.ato.gov.au/). The online service is a good example of bundling for the customer’s convenience: it brings together information from multiple tax accounts and across multiple tax types as well as linking with sources of advice within the tax office. The site can be personalized and is kept secure through digital certificates.

While not yet available for all businesses, the site is becoming popular among those that have used it. One large company reported that its tax account reconciliation process has been reduced from two weeks to three hours because of the availability of online information and reports. According to the Aussie Tax Office, 830,000 people filed their taxes in 2004.

Ireland

Ireland’s Revenue On-line Service, http://www.ros.ie/, has a feature that allows users to estimate their likely tax liabilities without having to submit any paper forms. As an added incentive, Revenue Online Service allows customers an extra three weeks to file their returns and pay the tax due.

Providing these benefits has paid off. According to the Irish Office of the Revenue Commissioners, the total number of online transactions more than tripled from 2002 to 2003, and the number of digital certificates issued in 2003 increased by 72%. Forty percent of income tax returns were filed via the Revenue Online Service in 2003. It also collected 17% of all revenue related to business taxes in 2003. The total number of payments made via the service currently stands at €13.5 billion.

France
The French service for online value-added tax filing and payment (http://tva.dgi.minefi.gouv.fr/index.jsp) has also had excellent take-up and is proving popular among citizens and businesses alike. Supported by online and telephone assistance, and secured by digital signatures and certificates, some 600,000 French income tax returns were successfully filed online in 2003. Further take-up is driven by the fact that Télé-TVA is mandatory for companies with more than €15 million of revenue per year. The French Ministry of Finance reports that €61.4 billion, or 50% of value-added tax, has been declared and paid online by 50,000 businesses using Télé-TVA.

Spain
The Spanish revenue site of the Agencia Española de Administración Tributaria is similarly rich. Citizens can submit their tax returns online using a digital signature and get status updates, help and more information about taxes. All the services provided by this agency are available through the citizen portal (http://www.administracion.es/). The success of the French and Spanish services shows the value of providing support for users to ensure their initial online experiences are good ones.

Sweden

Sweden’s Virtual Customs Office (http://www.tullverket.se/) is perhaps the most innovative service we saw in the customs area in the past year. Businesses that have a credit account at the Virtual Customs Office can get invoices electronically and pay them via any online banking service, while those without an account still have to pay in cash at the border. The Virtual Customs Office is part of the Swedish quality initiative, The Stairway. The Stairway enables companies to receive streamlined and quick customs handling if they cooperate with the customs office and allow the office to quality-assure the companies’ customs-related processes beforehand.

The web site of the Virtual Customs Office has a section where users can see taxes and duties for all goods. The electronic customs declaration service allows businesses to lodge import and export entries electronically for clearance. Fast freight companies and other businesses that use the simplified process can communicate their manifests through this service. To sign documents electronically, these users need only a mobile phone, to which a unique sign-in code is sent by short messaging service each time the user logs in. All entries can then be made and signed electronically.

Exploring new business process possibilities
Revenue agencies are discovering new strategies to better align processes with goals as they achieve higher levels of performance. By applying the best ideas from both the public and private sectors, they are improving access to services for individuals, businesses and other government agencies, resulting in:

In New Zealand, for example, Inland Revenue has begun segmenting taxpayers into categories based on their payment history. Instead of pestering compliant taxpayers with penalties when they slip up, the agency sends a friendly reminder. In contrast, it sends an enforcement agent when an inveterate non-complier misses a payment.

The organization’s strategic designer explains: “If they’re doing the right thing, we want to make compliance as easy as possible. If they’re trying to do the right thing, but don’t always succeed, we assist them to comply. As we get into the small group of people who don’t want to comply, it becomes more of an enforcement system.”

By differentiating among taxpayers, Inland Revenue provides a more convenient and helpful experience to most people, and can target its compliance resources where they will have the most impact.

Another example is after redesigning their information systems architecture to focus on taxpayers rather than types of taxes, managers at the Irish Revenue Agency realized that the new systems enabled them to make a similar change in their organizational structure. The result has been a dramatic improvement in responsiveness and convenience for clients.

Transforming service, transforming governments
As the era of quick wins and dramatic progress in eGovernment initiatives passes, governments must focus their energies on maximizing take-up. For the time being, most are still confronted with the challenge of low usage and the need for innovative methods to encourage users to use the online services. Once that phase is past, they can move into a new realm of service transformation.

Governments should and, in some countries, are moving taxpayers toward a tax return free era. The government will complete it on your behalf based on the information it already has on citizens. This is the next evolution of eGovernment online and the creation of proactive service delivery by high-performance governments.

The innovative sites of tomorrow will do more than simply replicate the physical world online. Accenture believes service transformation of this nature will lead governments to become proactive — anticipating and pushing services out to citizens and businesses rather than simply responding to requests and claims.

Governments that transform their services will not think in terms of horizontal and vertical integration alone, but will create entirely new services enabled by seamless integration. No government has yet achieved service transformation, but we expect that those that succeed can look forward to the rewards of high performance and better engagement with the citizens they support.

For the complete eGovernment Leadership: High Performance, Maximum Value report, as well as research methodologies and additional analysis, please visit the “research and insights” section of www.accenture.ca.

Canada leads the pack in eGovernment*