November 24, 2020
Digitization and a Customer Centric Approach Are the Way to Go for Tax Administrations
The definition of customer was long associated with transactions. Meaning that someone became a customer at the point of sale. As long as the interaction was quick and accurate, there was a belief that customers were walking away satisfied. As businesses started to gain a greater appreciation of the importance of customer experience (CX), there was a notable shift in how customers were defined. Today, revenue agencies and tax administrations are starting to understand the benefits of taking a customer centric approach when it comes to delivering services to their citizens. They are also beginning to recognize that by embracing CX, and holistically applying it to all of their operations, that they can optimize budgets, improve regulatory compliance, and boost employee engagement.
Along with these revelations comes the realization that current taxation models aren’t keeping up with technological advancements and that a comprehensive long-term strategy to digitize tax functions is required to create meaningful change to the citizen’s journey. Below we outline some of the steps tax administrations can take to ensure a customer centric approach across their organization.
Approach Everything From the Citizen’s Point of View
As human beings, our natural instinct is to find ways to do things more efficiently. In other words, we’re hardwired to look for the quickest path to reaching our goal. That’s why as tax administrators, you should be focused on learning as much about your citizens as possible so you can truly understand who they are, what they want to achieve, and how they want to engage with you. Once you’ve got a solid understanding of your customers, consider personalizing online and offline interactions, customizing e-services, and rolling out omni-channel communications so that you can better meet the needs of all of your citizens.¹ As much as possible, aim to deliver services in real time and streamline all processes so they’re simple, intuitive, and consistent. You can achieve this by leveraging innovative technology. Not only will these solutions help remove any friction on the citizen journey, it will also allow you to automate tax collection functions so you can easily send payment reminders to citizens, reducing the burden to chase them.
Elevate the Citizen Experience
We’ve established that humans prefer to simplify tasks as much as possible. As revenue and tax agencies, you need to remember this because paying taxes is a task most people don’t like doing. To improve this experience for your citizens, you need to simplify as much, and wherever, possible. That means automating calculations, providing easy access to information, and making an effort to use more user-friendly design. Doing so has the potential to increase tax compliance by helping to remove any barriers that may cause a citizen to get on the wrong side of the tax man.² As well, you must meet citizens where they are, and that’s on mobile phones, in their inboxes, and on their smart speakers. This is where the private sector is interacting with customers, you need to be there too if you’re committed to improving the citizen experience. There’s also an increasing number of citizens who prefer self-serve options like web, SMS text, chatbots, and mobile apps. In fact, over 60% of consumers in the U.S. prefer an automated self-service, such as a website or mobile app, for simple customer service tasks.3 By providing an omni-channel payment experience, you will further simplify the payment process and increase on-time payments, which improves citizen satisfaction and increases payment compliance.
Unlock the Power of Data
Citizens and businesses are producing data at unprecedented rates. Unfortunately, most tax and revenue agencies are not well equipped to unlock its value.4 Data is one of the most valuable assets you have because it can help with your tax collection and audits. Having citizen data at your fingertips also gives you insight into how citizens act which in turn allows you to develop better processes and more practical policies.5 It’s because of this that makes having the right tools to effectively capture and analyze all of this data a top priority. Now, along with all the benefits this data collection brings are greater risks of cyberattacks and data leaks. It’s absolutely critical to have the necessary systems in place to protect your citizens’ data and payment information. Always partner with providers that are PCI Level 1 compliant, that encrypt data using tokenization at every point of the payment process to best secure confidential information.
Consider the Many Other Benefits
- Increased citizen satisfaction – Through the digitization of tax services, simpler forms and processes can be rolled out which means fewer interactions are required for citizens to complete a task. Digital services also result in fewer tax errors because data is automatically entered and calculated.6 By providing consistent information, standardized services, and fewer miscalculations, citizens are more likely to perceive the agency as honest and fair, making them more inclined to comply with tax regulations.
- Enhanced transparency and trust – Having electronic solutions for everything from tax registration, to filing, to payments increases transparency around the tax payment process and builds citizen trust in the system.7
- Connected tax stakeholders – Digital platforms deliver easy access to tax information and the ability to share that information in real time. This makes it easier for tax administrators and taxpayers to work together as well as helps tax administrations share data with banks efficiently and securely.
- Improved administrative efficiency – Streamlined processes and digital solutions all contribute to a better citizen experience. As governments expand their use of innovative technology, substantial efficiency gains can be realized.8 Additionally, digitization reduces operations times, decreases operating costs, and improves audit efficiency for tax administrators.9
Taxpayers Expect More
As an IT professional looking to improve your customer experience, you need to know that they expect more from you than ever before. They are looking for easy-to-use services that are personalized, available in real time, and accessible at any time. This may sound next to impossible, but the good news is that an automated, integrated system can help you meet these expectations. For you, adding automated reminders will encourage citizens and businesses to pay on time and reducing manual inputs will minimize the risk of errors which improves the credibility of the agency. These solutions not only boost taxpayer satisfaction but will also help increase compliance.
KUBRA’s extensive suite of customer experience management solutions for government can improve citizen interactions and help you deliver the type of exceptional experiences that your citizens have come to expect while offering the reporting and reconciliation tools you need to give citizens the transparency they’re seeking.
- Digital Transformation of Tax Administration, PWC, 2017.
- The revenue agency of the future, Deloitte Insights, 2020.
- How Millennials are Shaping the Future of Customer Service, Nextiva, May 2020.
- Borowski, Craig, Improve the Customer Experience Through Better Mobile Support, Software Advice, December 12, 2016.
- Use of digital technologies set to increase tax compliance, OECD, 2019.
- Why digital transformation matters for taxation, World Bank Blogs, 2020.
- Why digital transformation matters for taxation, World Bank Blogs, 2020.
- How Digitalization Will Completely Transform Taxes, Quaderno, 2018.