Tax technology opportunities

Are new tax technologies something to fear or an opportunity to do things differently?

One of the contentions in my book Rethinking Taxation (2014), repeated in several blog posts around the time, was that IT advances could change taxation in the same way that it changed other aspects of our lives.

We are now starting to see these developments happening. Real time taxation has been introduced in the UK and an article in today’s Financial Times explains how HMRC is increasingly making use of big data.

This can make tax easier for taxpayers and make it easier for HMRC to crack down on fraud. 

New taxation, new economy

My argument has always been that this opens up the possibility of making the whole economic system much fairer. 

We can calculate everyone’s tax-rate in a more personalized manner without the bureaucratic challenges this would have made this impossible in the past. 

Technology will make it possible to apply a much more thorough tax base, taking much better account of the gains that each person gets from society. 

Put together, these reforms would tax the economically fortunate much more and provide direct support to the less fortunate, skewing the benefits economy back towards working people. 

This can be achieved without the discouragement to work that some people accuse tax-and-redistribute programmes of. 

You can find out more about my proposals for a different way of working out who should get what in society by reading my book Rethinking Taxation, reading some blogs I wrote around the time, or watching some videos I made.

Should we be concerned about the developments?

Legitimate concerns remain about the digital divide and an overpowering state. My view is that these IT developments are going to continue anyway, so we have to hold the state to account and make sure that technology is used to make things better for the citizens.

My proposals should help in this regard by building direct distribution to individuals into the system, not leaving resources directly under the control of politicians or bureaucrats.

We should be concerned, but this just means we have to uphold our duties as citizens to keep ourselves informed and to hold our government(s) to account. We have to demand that the system supports those who aren’t digital natives, that the state does not adopt arbitrary powers, and that the system is making society fairer not less fair.

Taxation for the future

Governments might not be as innovative with technology as the private sector, but we voters can demand that they use the technology available in ways that improve our lives and society.

New taxation technology creates the opportunity to have a fairer economy, if only we demand it.