DIGITALISATION AND CENTRALIZATION OF THE DANISH TAX ADMINISTRATION - THE GOOD, THE BAD AND THE REAL UGLY EFFECTS SEEN FROM A PUBLIC SECTOR UNION PERSPECTIVE - AND A PICTURE OF THE FUTURE IN OTHER AREAS? THOMAS LYNGE MADSEN, SENIOR CONSULTANT, HK STAT DENMARK EPSU SEMINAR ON DIGITALISATION 13TH JUNE 2016 ÖGB OFFICES, VIENNA, AUSTRIA
THE BACKGROUND OF THE EXPERIMENT - OBJECTIVES SIDE: 2 17. JUNI 2016 HK PRÆSENTATION / In 2005 the many local tax-, customs- and debt collection administrations merged (= centralized) with the state administration. / All functions were henceforth in the state administration (“SKAT”) and not at local level, including debt collection. / Officially the most important purpose was to “ create an open and holistic administration with citizens and businesses in the center and enhance legal certainty and uniformity ”. / But the second official purpose was probably more important: To achieve (massive) savings from synergies, economies of scale, reduced duplication, regulatory simplification and modernization of IT systems.
THE BACKGROUND OF THE EXPERIMENT - TOOLS SIDE: 3 17. JUNI 2016 HK PRÆSENTATION / One single authority (“SKAT”): Citizens and businesses should in future only be serviced by one authority. / Fewer locations - from a minimum of 271 locations (probably much more) to 30. / Specialization - organizationally and in relation to employees. / One payment center - for the whole of Denmark / Extensive digitalisation initiatives – aiming for a high degree of digitization, automation and digital communication / One telephone contact center - less personal contact with the citizens. / Not necessarily the great local knowledge of debtors and taxpayers.
THE GOOD EFFECTS…. SIDE: 4 17. JUNI 2016 HK PRÆSENTATION The digitalisation of the tax administration in regards to the taxation of “ordinary” employees in Denmark is one / of the world's most automated and digitized. / The system has been rather successful (but do not forget people without IT skills!): / A high degree of digitalisation, automation, digital communication and effective digital reporting systems have made things easier for most employees and for the employer: / Tax is automatically deducted before payment of salary from your employer and reported digitally to the tax administration. / The annual tax returns and so on run automatically and the individual should not do much themselves each year (other than report mileage to and from work etc.). / It is easy (and so far) reliable. Very difficult to cheat. The system is taken for granted. / BUT IN MANY OTHER AREAS SUCH AS DEBT COLLECTION AND TAX IN REGARDS TO BUSINESSES AND FRAUD, THERE ARE MANY PROBLEMS…..
THE BAD EFFECTS …. SIDE: 5 17. JUNI 2016 HK PRÆSENTATION Massive reductions in staff – and more to come …. Staff in the tax administration 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 2002 2004 2006 2008 2010 2012 2014 2016 2018
THE BAD EFFECTS …. SIDE: 6 17. JUNI 2016 HK PRÆSENTATION Much fewer locations – and more to come …. Locations 300 250 200 150 100 50 0 2000 2005 2010 2015 2020
THE REAL UGLY EFFECTS …. SIDE: 7 17. JUNI 2016 HK PRÆSENTATION DEBT IS NOW 82 BILLION KR. = 11 BILLION EUROS = 16 PCT OF PUBLIC CONSUMPTION (EFI COLLAPS) Debt to the tax administration from businesses and citizens 90 80 70 60 50 40 30 20 10 0 2006 2008 2010 2012 2014 2016
THE REAL UGLY EFFECTS…. SIDE: 8 17. JUNI 2016 HK PRÆSENTATION / The tax gap is growing . It’s estimated that 30 -40 billions kr. are lost every year. (4-5,5 billion euros) / Compliance among companies has fallen. / Large case of fraud of 10 billion. kr. has just emerged. / The confidence of citizens to the tax administration has fell - dangerous for the welfare state. / Danish Auditors, EY, university professors and many others demand more ressources.
THE REAL UGLY EFFECTS…. SIDE: 9 17. JUNI 2016 HK PRÆSENTATION / Many layoffs during the last ten years. / Frequent restructuring and geographic relocations the last ten years. / High stress levels among employees. / Job satisfaction among employees is at a record low. / Employees are proud of their professionalism - but many does not tell any longer that they are working in the tax administration at dinner parties and so on. / Movement toward more IT people and academic professionals rather than those with medium education. / More specialization and less routine tasks (both bad and good) / = SKAT is in crisis
WHAT WENT WRONG …. LESSONS LEARNED SIDE: 10 17. JUNI 2016 HK PRÆSENTATION / Digitalisation/centralization: Primarily been a way of achieving massive / savings instead of investments. / Savings were gained in advance and the employees were fired before the IT systems came to work. / Massive IT problems / Politicians and the Treasury have stupidly and stubbornly demanded that the plan to cut down should continue – even though everyone could see it had collapsed (even EY!) / "System Error": Resources for the tax administration will pay for itself many times - but the public income and expenditure systems in the Treasury are running in separate systems. / Excessive reliance on digitalisation and its potential - excessive and unrealistic technology optimism. / Insufficient involvement of employees' professionalism and detailed knowledge. / Star wars-projects …. (the central government agency for digitalisation says that they have learned from the Skat-mistakes – but let us see ….)
WHAT HAVE WE DONE…. SIDE: 11 17. JUNI 2016 HK PRÆSENTATION
HOPE AHEAD? SIDE: 12 17. JUNI 2016 HK PRÆSENTATION Yesterday (12 th of June 2016) the liberal minister for Tax Administration said: - “ If we do not invest our way out of these problems, the costs to the tax administration and the confidence to the tax administration and our entire social model are challenged ” Karsten Lauritzen, minister for Tax Administration = Enormous need for a comprehensive plan for investments in employees and IT!! …….perhaps he just read the EPSU position paper – perhaps not .
BUT DIGITALISATION IS MUCH BIGGER THAN “JUST” SIDE: 13 17. JUNI 2016 HK PRÆSENTATION THE TAX ADMINISTRATION…. …. / Digitalisation and automation are very high priority for all danish governments. / The easy steps are implemented in many places - now comes the really intrusive: / Fully automated and digitalized ”decision making ” of the citizens' individual cases. With less individual considerations. / Minimal (digital) communication and contact with the citizens. / Is that a society that the citizens want? NO! HK Stat survey shows that. See article. / HK Stat wants to put the citizens in citizens at the center of digitization.
HOW TO PUT THE CITIZEN IN THE CENTRE OF DIGITALISATION 10 GOOD PRINCIPLES FOR THE DIGITALISATION OF PUBLIC ADMINISTRATION
10 GOOD PRINCIPLES FOR THE DIGITALISATION OF PUBLIC SIDE: 15 17. JUNI 2016 ADMINISTRATION HK PRÆSENTATION (SEE ALSO SLIDE ABOUT HISTORIC MISTAKES IN RELATION TO THE TAX ADMINISTRATION) / 1. Put the citizen first / 2 . Take the citizen’s entire situation into account / 3. Maintain justice / 4. Always provide the opportunity of competent and flexible service – on all channels / 5. Always provide the citizen with access to the person in charge / 6. Always include quality in digitisation / 7. Always involve citizens and employees in development / 8. Support fellow citizenship / 9. Let the service drive digitisation – and not the other way round / 10. Use digitalisation to strengthen regional Denmark
SIDE: 16 17. JUNI 2016 HK PRÆSENTATION
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