An annual publication from Montgomery Research
A thought leadership initiative from Accenture & Montgomery Research, Inc.
Chapter 1:
High Performance
The performance of corporations and businesses is subject to continuous scrutiny.
Analysts, investors and management are provided with a wealth of information
about how companies have performed and what their business strategies are for
the future. Value can readily be measured in terms of market capitalization
and earnings distributions, and performance can be measured by plotting how
these change periodically.
There is no equivalent performance standard in the government sector, even
for revenue agencies that provide clear financial outputs. So how can we define
the value delivered by a revenue agency, and how can we measure performance
over time?
This chapter sets the scene for this book by introducing Accenture’s Public
Sector Value Model, which is a disciplined approach to identifying public sector
outcomes and quantifying results. While governments today may measure performance
through factors such as productivity, the Public Sector Value Model takes a
more strategic perspective by measuring how well a revenue agency delivers outcomes
for its stakeholders – people and businesses in the community.
In Accenture’s Public Sector Value Model for Revenue, agencies achieve high
performance by optimizing the following five outcomes:
- Maximizing revenue;
- Maximizing compliance;
- Minimizing taxpayer burden;
- Maximizing responsiveness to stakeholders;
- Cost effectiveness.
These outcomes are interdependent, so, for example, reducing taxpayer burden
is likely to improve revenue collections. This means that high-performance agencies
will have strong capabilities across all these outcomes rather than particular
strength in just one.
Chapter 2:
Maximizing Revenue
From the community’s point of view, the most obvious outcome produced by a
revenue agency is the revenue it collects for the government. Maximizing revenue
is not about aggressively pursuing all possible revenue at any cost. Rather,
it is about assessing and collecting tax due equitably and fairly under the
law in the most cost-effective manner possible.
Over the last several years, agencies have used computer systems to dramatically
reduce the time and effort involved in processing returns and payments. Computerization
has made assessments more consistent, and made it possible for agencies to cope
with the flood of returns around a filing date. These systems typically incorporate
procedures to identify which returns require manual review.
Now, new innovations are enabling agencies to focus their efforts more acutely
on the taxpayers who are least likely to pay their taxes and automate processing
for the remainder. Agencies can refine the process by using sophisticated risk
models that take account of past behavior, industry trends and third-party information.
These models can be used to assess risk on a taxpayer-by-taxpayer basis, which
enables agencies to identify revenue risk more precisely and allocate resources
to areas that will have the biggest yield.
Processing is also becoming timelier. The computer systems that were once used
throughout the night to process payments and returns are now being replaced
by Web-based systems that complete all processing while the taxpayer or their
agent is still online.
This chapter explores the practices and innovations agencies are using to maximize
the revenue they collect.
Chapter 3:
Maximizing Compliance
In public sector value terms, maximizing compliance means maximizing the ratio
of taxpayers who complete their tax return in compliance with the law, file
and pay the full amount on time. This definition is crafted to represent the
outcome of a much wider set of activities than the administration of penalties
or other consequences of noncompliance. Compliance cannot be maximized by just
inflicting the greatest possible penalties, interest charges and prosecutions
as these activities alienate a revenue agency’s core stakeholder – the taxpayer.
Compliance levels depend greatly on taxpayer perceptions. Taxpayers are more
likely to comply if they believe other taxpayers are compliant, if they understand
their own responsibilities and how to fulfill them, if it is relatively convenient
to comply and if they believe there are consequences for noncompliance.
Often revenue agencies manage payment and return processing, compliance and
customer service as separate functions.
Maximizing compliance requires a carefully judged and coordinated approach
across all these areas, incorporating effective public outreach, education,
customer service and convenient payment and filing facilities.
Agencies are now exploring proactive measures that are designed to prevent
noncompliance using an integrated approach, which is based on better education,
assistance and improved service.
Computerized case management systems are being used to detect and manage noncompliance
more promptly and consistently than in the past. These systems are being improved
by incorporating more external data and more flexible practices that take account
of past taxpayer behavior.
This chapter explores how agencies are bringing together integrated strategies
to maximize compliance.
Chapter 4:
Minimizing Taxpayer Burden
Taxpayers can find the workload and complexity involved in complying with tax
regulations daunting. Taxpayers who file annually are required to familiarize
themselves with the procedure and work through their records to find all the
information required. Businesses that file more frequently are required to devote
attention to tax issues that would otherwise go into their business. These pressures
lead to lower compliance rates and higher error rates.
Minimizing taxpayer burden means minimizing the amount of time and degree of
difficulty involved for taxpayers to meet their obligations. It also means payments
of refunds and grants are made promptly.
Over the last few years many agencies have addressed these issues by simplifying
return forms, writing clearer instructions and offering more convenience. A
small number of agencies have even been able to remove the requirement for taxpayers
to file a return at all, depending instead on reliable third-party information
to arrive at an assessment.
In addition, agencies are stepping up efforts to make it easier for taxpayers
to get the information they need to complete tax forms. Increasingly, they are
organizing information around typical life events and are writing in plain language
rather than using legal or technical terms.
Taxpayers are now being offered the same convenient selfservice options they
expect from private sector organizations. They can see information about their
accounts and complete transactions online at a time that is convenient for them.
This chapter explores how agencies are making it easier for taxpayers to comply.
Chapter 5:
Maximizing Responsiveness to Stakeholders
Taxpayers form the largest and most diverse group of stakeholders for a revenue
agency, but there are other stakeholders, including intermediaries that work
on behalf of taxpayers, service providers such as banks, and the government.
Maximizing responsiveness means serving the different requirements of these
stakeholders promptly and accurately the first time.
- Being responsive to taxpayers and their intermediaries means maximizing
the quality of assistance provided to help them comply with their obligations
and effectively resolve questions and issues.
- Being responsive to service providers involves effective management of contracts
and service level agreements.
- Being responsive to the government means providing accurate information
about the operation of the tax system, the ability to model potential changes,
the ability to change agency policies and systems as the law changes and the
sharing of information with other agencies.
Agencies that have established an integrated view across all a taxpayer’s interactions
with the agency are now piloting relationship management practices. This is
different than providing one-stop service from a call center that is organized
around managing individual interactions. Relationship management takes a long-term
perspective, recognizing that a taxpayer’s compliance now and in the future
is related to past experience of the tax system. Revenue agencies can expect
to improve compliance by being more helpful throughout people’s lives.
This chapter explores how agencies are becoming more responsive to their stakeholders.
Chapter 6:
Cost-Effectiveness
Cost-effectiveness in public sector value terms is a measure of productivity.
A revenue agency can become more cost effective by improving its performance
(for example, reducing the burden on taxpayers) through cutting costs or achieving
both simultaneously.
Revenue agencies handle more interactions and transactions than other government
organizations, so they are always seeking better ways of managing the workload.
Flexible integrated tax systems have made it possible to process high volumes
of payments and returns quickly and reliably, and now revenue agencies are finding
new efficiencies using risk-based processing. Risk-based processing makes fine-tuning
processing rules possible in order to maximize the effectiveness of manual work.
Revenue agencies will seamlessly link with whole-of-government services. The
whole-of-government integration will have giveand- take benefits for revenue
agencies. On one hand, they will make use of data available from other agencies
for risk management; on the other, they will increasingly provide services beyond
tax collection. For example, revenue agencies may disburse benefits, such as
child welfare payments, for other agencies.
Revenue agencies will share nonstrategic functions, such as human resources,
information technology and procurement, with other agencies to gain significant
economies of scale and focus resources on direct revenue collection activities.
Revenue agencies are natural candidates to lead shared services across multiple
government agencies, as they are already central collection and processing points
for funds and information. Revenue agencies already have the solid foundation
of expertise needed to anchor shared service initiatives related to registration,
licensing, revenue collection and debt collection, for example.
This chapter explores how agencies are becoming more cost-effective.
Chapter 7:
Bringing It All Together
High performance in a revenue agency requires a coordinated effort across all
the different parts of the organization. To be effective, even incremental improvements
must be implemented in a manner that integrates with other parts of the agency.
The major strategic priorities driving revenue agency change programs usually
place strong emphasis on improving the quality of service provided to the community,
and on taking full advantage of new, interactive channels. In addition to those
objectives, agencies are also seeking major improvements in the efficiency,
timeliness and flexibility of their internal processes.
Projects involving technology continue to get more complicated to deliver,
and agencies have become more wary of large-scale transformational change programs.
Some agencies are opting instead for more gradual change, complementing their
existing infrastructure with initiatives such as the implementation of new channels
or contact management. Other organizations are conducting major change programs
that will replace their existing information technology and enable them to dramatically
improve their operations, and putting in place governance and management processes
to manage the complexity.
This chapter examines how revenue agencies are planning and managing the implementation
of change in their organizations, the priorities they are setting, the scale
of change they are undertaking and how they are organizing themselves for success.
Chapter 8:
Reform In Developing Countries
Certain business challenges appear in revenue agencies around the world – for
example the pressure of high-processing workloads, managing compliance and the
administration of complex legislation and policy. In developing countries, some
of these challenges can be acute.
Common examples are:
- Low registration rates, i.e. substantial parts of the community do not register
correctly as taxpayers.
- Convincing taxpayers that the tax agency and its representatives act in
accordance with the law, that there is a high standard of internal controls
and the integrity of financial processes is maintained.
- A largely manual tax administration process with long processing cycles
and limited customer service.
- Little capacity for enforcement against deliberate tax evaders, inaccurate
and late lodgers and debtors.
- An incomplete picture of taxpayer affairs makes it hard for the agency to
provide consistent or complete information to taxpayers, which often suggests
to taxpayers that their own inaccuracies will go undetected.
This chapter examines how agencies in developing countries are addressing these
challenges and how they are skipping the evolutionary process that many other
agencies have been through.
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