DIGI Co-hosts Inaugural Prosperity Collaborative Online Event

The Coronavirus pandemic is proving both the critical importance of public finance infrastructure in responding to the crisis and the deep deficiencies that exist in tax and revenue systems worldwide. Governments are bracing for unprecedented declines in tax receipts as a result of pandemic-related economic slowdowns. Early approximations of revenue shortfalls estimate that U.S. states could lose as much as 30% of their anticipated revenue in coming years. On a global basis, this phenomenon could cost governments trillions of dollars. Most public finance authorities are not equipped with technologies that could help them manage this crisis or effectively distribute stimulus payments to people in need.

Along with the World Bank, MIT, EY, and the Michael Dukakis Institute for Leadership and Innovation, the Digital Impact and Governance Initiative at New America has been proud to play a key role in founding the Prosperity Collaborative. Together, our organizations are working through the Collaborative to help meet the challenges facing tax and revenue services worldwide. We hope to develop a new generation of digital public goods that will make tax systems fairer, more accountable, and more efficient.

This week, the Collaborative hosted its inaugural online event on how technology can help leaders involved in public sector revenue management transform their efforts to respond to the coronavirus. Our panelists included leaders from the World Bank, Kenya Revenue Authority, the National Bank of Cambodia, Microsoft, EY, the SAS Institute, MIT, and New America. You can access the agenda and a recording of the event here.

Some of our key takeaways:

• Taxes generate valuable data. The information gathered from citizens and companies that interact with tax authorities can provide important insights into how our economies and societies can work better. Tax administrations should analyze and share this data to help deliver better policy outcomes in addition to collecting revenue.
• Digital technology can drive better institutional performance and enhance resilience. As a result of the pandemic, digital transformation plans that were originally slated to take years are being completed in days. Mobile payment systems, remote working infrastructure, and AI-powered auditing can improve the performance of tax and revenue systems while preparing governments to manage future crises more effectively.
• National challenges can benefit from global solutions. Countries in the Global North have a lot to learn from the digital platforms used by the Global South, which are often less encumbered by expensive legacy systems. Enhanced cooperation and regular exchange of best practices can help countries deploy digital infrastructure more quickly, especially during times of crisis.
• Start small, but move fast. Governments should look to harness innovation in the private sector as well as in smaller, more agile jurisdictions to test new solutions and scale to the broader population. The only way to address the many of the challenges facing revenue authorities is through sustained, rapid experimentation.
• Tech is necessary, but not sufficient. People matter in digital transformation. New digital tax systems may cause confusion or arouse suspicion among citizens unfamiliar with the technology. Starting with innovations that make digital payments more convenient can build trust and provide paths to integrate tax solutions into everyday life.
• Tax platforms need new governance models. Digital technology and citizen services are converging, and we need the private sector, civil society, and government to come together to ensure fair, transparent, and accountable management of digital tax platforms. Multi-stakeholder oversight can build trust and expand buy-in around new solutions.
• Tax administrations need to strengthen their capacity. Digital innovation in taxation needs to benefit tax administrators. Governments need to invest in training to empower tax bureaus with the skills they will need to administer new systems and transform tax data into effective policy.

DIGI is building a global ecosystem of stakeholders in conjunction with the Prosperity Collaborative. The Collaborative’s work will focus on three areas:

• Strengthening the capacity of developing countries to digitally transform their tax systems through training and knowledge sharing.
• Facilitating the development of innovative tax technologies and new standards where there is a strong need from developing countries and a gap in the market.
• Promoting open source technology governance models that are interoperable with existing systems, lower implementation costs, and adhere to common standards and data models to encourage collaboration across countries.

No single institution has the capabilities, capacity, and legitimacy to do this work alone. However, these tasks couldn’t be more urgent. Countries with high-quality digital tax infrastructure have been more agile and effective as they adapt to the pandemic. Every government that wants to provide its people with world class services will need similar solutions in the future.

We’d like to thank our panelists and moderators for their fantastic contributions:

• Chiara Bronchi, Global Practice Manager, Fiscal Policy & Sustainable Growth, World Bank
• Dr. Terra Saidimu Leseeto, Commissioner for Intelligence & Strategic Operations (ISO) for the Kenya Revenue Authority (KRA)
• Her Excellency Serey Chea, Assistant Governor, National Bank of Cambodia
• Jacky Wright, Chief Digital Officer, Microsoft
• Jeff Saviano, Global Tax Innovation Leader, EY
• Jeffrey Cooper, Executive Industry Consultant, SAS Institute
• Kate Barton, Global Vice Chair – Tax, EY
• Marcello Estevão, Global Director, Macroeconomics, Trade & Investment, World Bank
• Raul Felix Junquera-Varela, Lead Public Sector Specialist, World Bank
• Sandy Pentland, Professor, Connection Science, Massachusetts Institute of Technology

If you work with digital innovation teams within your country, build on digital tax solutions and applicable standards, or can help us mobilize the necessary resources, we’d love to hear from you. Send us a tweet at @DIGI_NewAmerica, follow us on Twitter, or subscribe to our newsletter. To learn more about the Prosperity Collaborative, visit our webpage. We look forward to working with you to solve the monumental challenges facing public institutions worldwide.