Friday, December 04, 2015

Australian Tax Office (finally) considering going digital by default, but walk and talk don't match

The Australian Tax Office (ATO) is currently asking Australians what they think of the idea of the ATO going digital by default.

As they rightly point out in the Consultation paper, the current ability of the ATO to do this is restricted by legislation, which often defines the channels by which certain transactions can occur or services be provided, not simply the desired outcomes and outputs.

This kind of policy blindness to digital is to be expected in legislation developed before the 1990s, or even the 2000s, and can take substantial time to unwind and correct. It's less acceptable (though sometimes still present) in more recent legislation - reflecting a failure to learn and understand the impact of digital on the modern world.

For the ATO these policy issues have meant a constant challenge to work within their legislative framework to still deliver the best possible services to clients, thereby prompting accurate and timely payment of taxes and funding the government's operations.

To complicate matters further, the ATO has been shedding highly experienced staff in a series of budget cuts that, in my view, have severely degraded their ability to operate effectively.

I am glad to see this consultation occurring, however feel that the way in which they are doing it leaves much to be desired and, in my view, weakens my trust in the ATO's ability to go digital by default in a manner that maximises tax compliance through making it easier and simpler for people to meet their obligations.

The form provided for feedback has some unusual restrictions on the number of characters used in responding to the consultation paper, making it difficult for those of us who care to fully flesh out our answers with evidence and perspectives.

When submitting the form there's no acknowledgement of the submission - a standard in most online engagement processes today in order to 'complete the loop' and have people feel listened to and acknowledged. I did (after 40 minutes) receive an email with my submission, which is good, but is hardly the immediate feedback people should expect.

On top of this, the consultation itself seems to focus on a 'stick' approach to gaining compliance as the ATO goes digital by default.

There's no discussion of how the ATO will ensure that digital services are better and easier to use than their offline equivalents in order to create a natural pull effect as people walk downhill to the easier way of completing their tax obligations.

There's discussion of penalties for people who are slow to shift to digital services, but no discussion of rewards for those who move quickly and decisively. A stick without carrot approach rooted in old-style punishment-based thinking.

I think the ATO would be far better placed looking at ways to gameify tax paying, creating rewards for good behaviour and making the system habit-forming rather than a chore.

There's opportunities for the ATO to work across the tax ecosystem, into GST registration, company formation and key life events which lead to tax implications - graduations and retirements, new jobs and redundancies - simplifying the end-to-end system to make it a smoother and seamless process for addressing tax issues, directly or via other connections.

There's enormous opportunities for the ATO to API the tax approach, allowing third-party apps and services to be developed on top of tax paying, as the Canadian tax office already has done. In this scenario the ATO is the support service and engine, but not the interface, meaning they can run a better service with fewer staff and lower costs.

However the biggest opportunity is to move to a codesign approach for tax services, where taxpayers design the services and the ATO implements and manages them. In this scenario it wouldn't be the traditional senior public servants and Ministers approving the services and tweaking them to meet what they believe people want and need, instead it would be the actual taxpayers designing the services they wish to interact with and then approving the systems the ATO develops.

Definitely digital by default is a path the ATO must walk, but whether it walks it well and successfully should really be the key question and goal.

A consultation is a good first step, but the ATO needs to demonstrate that it isn't just walking the path, but is doing so with eyes and minds open, with a goal of the best outcomes for tax collection, via creating services that people don't hate to use.

The way the ATO designed the consultation itself is the first example of the ATO's commitment and approach to developing an appropriate digital by default approach - and thus far it leaves me concerned.


  1. I like your reference to gameify taxpaying - i have thought for some time that the ATO should reward people for lodging on time - it costs a lot of money each year to chase all those late BAS and returns. If say, 3 years of perfect compliance would get a small business some kind of discount on their tax (with a dollar ceiling built in to make sure the discount isn't too big) I think a lot of people would be more particular about keeping their lodgements up to date.