telephone operations becoming a dying relic
Kitty Miv, Editor
22 June, 2018
Kitty's Country Rankings are below, with a description of how they are compiled. This week, as every week, I give out Encomiums to countries which have done Good Things, and award Execrations for countries which according to my highly personal and partial views have done Bad Things.
Earlier this year, in her annual report to Congress, US National Taxpayer Advocate Nina E Olson remarked that the Internal Revenue Service's telephone operations have become a "dying relic" of taxpayer service. However, the United States is not the only country where attempting to speak to a tax authority adviser by phone has almost become an endurance sport.
In Canada, over one quarter of calls to the Canadian Revenue Agency (CRA) went unanswered last tax season, and that's according to the CRA's own statistics. This is an issue in the UK too, to the extent that scammers have spotted a lucrative opportunity to cash in on taxpayer demand for tax authority advice by luring them into using premium-rate telephone numbers.
However, after much criticism about long hold times for callers to their contact centers, the tax authorities of Canada and the UK do seem to be getting a grip on the problem.
In the tax season before last, an astonishing 63 percent of calls to the CRA went unanswered. So, the most recent tax filing season's performance represents a significant improvement, even if you'll still only get through to a human less than half the time - just under 30 percent of calls to the CRA were answered by an "automated service," the agency said.
In the UK, most taxpayers can expect to wait about three-and-a-half minutes on average to be connected with an HM Revenue and Customs adviser, well within the department's five-minute target time. According to HMRC's most recent service performance figures, "only" 15 percent of callers wait 10 minutes or more. Remember though, 10 minutes of tinny muzak on a loop interspersed with a recorded message reminding you how important your call is to the department will probably feel like 100.
Following on from Olson's observations however, I guess a 10-minute hold for anyone trying to speak to an IRS agent would feel like a small mercy. I regularly come across horror stories of people waiting well over an hour to be connected to the IRS by phone, and there are few signs that the agency is getting a handle on the problem either, unlike Canada and the UK.
Indeed, in another depressing remark for US taxpayers, Olson said in her report that only four-in-ten callers can expect to reach a "live assister" in the 2018 tax year - as opposed to a deceased one? No wonder it's taking so long to get through. This relic isn't so much dying as ossifying!
It could be argued that there is little need for authority call centers anymore because guidance is, as a rule, somewhere online, and therefore, in the grand scheme of things, this isn't an important tax issue. The counterargument is that this is obviously important to the millions of taxpayers who phone tax authority call centers each year. And that so many people have something to discuss with a tax agent is probably an indication of how tax regimes have expanded to encompass nearly all aspects of life and have outgrown tax authorities' ability to administer and enforce them.
In the US, legislation is in Congress that would seek to restore the service aspect of the Internal Revenue Service's function. But given that tax authorities generally are doing more with fewer resources, maybe a trade-off will need to be made somewhere along the line in order for the human face (and voice) of tax administration to be restored.
As discussed here recently, perhaps technology provides the solution, freeing up scarce resources so that it can be spent on more taxpayer-facing operations. Maybe we are on the cusp of witnessing profound changes to the way in which tax authorities operate. Replacing the fossilized assisters with live ones might be a good place to start.
Further afield, profound changes are afoot generally, both politically and technologically. However, it's good to know that beneath the quaking and shaking, it's business as usual. And there's nothing like a good transfer pricing development to distract you from the turbulence and turmoil generated at government level in various places.
In Italy, for example, we can forget for a moment the uncertainty caused by the recent election of the most unlikeliest of coalition arrangements and instead get our teeth into "Provvedimento 108954/2018," setting out how Italian companies can request a "downward adjustment" to their taxable income in Italy following a transfer pricing adjustment in another territory, to avoid double taxation. If that doesn't take your fancy, then there's always the Ministry of Finance's consultation on whether to support the EU's digital tax plans, and in particular, its proposal for an "interim tax" on otherwise untaxed turnover earned by certain digital economy firms. Although, this could be a little bit racy, given the controversy the EU proposals have caused worldwide.
There's much doubt about whether the new Italian administration will be able to deliver on its radical promises, including in the area of taxation, or, indeed, whether it will survive long enough to even attempt to legislate for them. But at least we now know government and tax administration continues to function at a reassuringly mundane level, and that the foundations look firm even if the new house topples down.
Yes, in a world of much uncertainty, it's nice sometimes to hear something familiar. Denmark's tax burden, for instance, is still massive, even though reducing it is one of the Government's top priorities, according to the Tax Minister. That Denmark needs an entire ministry dedicated to taxation tells us something about the size of the tax system!
Another rule that continues to hold firm is that nobody listens to the International Monetary Fund. Unless, as a country, it's lending you much-needed cash, that is. But even then, it's fiscal recommendations are usually put in place somewhat begrudgingly.
The IMF complains about the high level of taxation on labor until it's blue in the face, but it's obviously wasting its breath. Just look at the European Union's latest Tax Trends report. Labor taxes continue to account for a shade under 50 percent of total tax revenues in the EU, Iceland, and Norway.
But maybe it's time countries took the IMF's conclusions a bit more seriously. After all, remember that at some point in the future, humans will be a rare sight in the work place, if predictions about automated economies and societies bear out. Robots and algorithms don't tend to earn taxable wages like humans do. So where's the tax revenue going to come from then? Ha, governments! Not so smart now, are you!?
Kitty's Encomiums and Execrations
Methodology: each week (this is the 147th) one or more countries are given encomiums and one or more are given execrations. Those are the entries below with descriptive links. In the following week, each encomium counts as + 1 for that country, and each execration counts as - 1, being added to that country's existing score. Over time, therefore, a ranking will build up for each country, and further countries will join the listing. Germany is at minus 2, since in the second week it had an execration and in the first week it had an encomium, leaving it at neutral; then it had an execration in week four, thus dropping to - 1, and another one in week six, dropping to - 2; finally in week 13 it got something right, so it went back up to - 1; then in week 16 it gained a further star, so then it was in neutral territory until week 23 when it dropped back to minus one, but reverting to neutral territory in the following week, then dropping to minus one in week 50, and back up to plus one in week 51, then to plus two in week 52. Some weeks ago it dropped a place, but then quickly recovered one step. Etc etc.
The rankings are intended to be a proxy for business friendliness; evidently they are highly partisan, but as time goes by they are becoming useful for decision-making. For any country in negative territory, you should think carefully before starting a business there.
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