Most people use the Internet to get news, play electronic games, or send e-mail. In Brazil, they also use it to file tax returns.
According to a survey completed last August by Cadê/IBOPE, a market research firm, 58 percent of all Internet users in Brazil claim to have used that medium to file their tax returns. That figure is borne out by Brazil's Federal Revenue Secretariat, which reports that nearly three million companies and individuals filed their returns via the Internet last year, up from around 700,000 in 1997.
That makes Brazil a world leader in this area, and it illustrates the remarkable effect that investments in information technology are having on tax collection and administration in some Latin American and Caribbean countries.
At a recent seminar at IDB headquarters entitled "Information Technology Applied to Tax Administration: Experiences and Trends," senior tax officials from several regional governments described almost identical scenarios. At the conclusion of the "lost decade" of the 1980s, tax services were operating with a handful of antiquated mainframe computers that undermined efficiency as often as they enhanced it. Without adequate information systems, officials found it difficult to determine who was and who wasn't paying taxes.
As economic conditions improved in the first few years of this decade, many tax agencies attempted to "leapfrog" technologically by buying the latest computer and network technology and pushing for a largely paperless process of collecting and managing taxes. In a few short years, for example, Mexico's Revenue Administration Service went from almost no automation to a system of 122 computing centers that networked to 20,000 terminals, or a ratio of less than two employees per computer. New software systems allow tax officials anywhere to access a "single taxpayer account," a computer file that is linked to all relevant information about an individual taxpayer. Seminar participants from Argentina, Brazil, Bolivia and Chile described investments on a comparable scale.
In addition to adopting internal accounting and control systems that facilitate administrative tasks, each of these countries has been using information technology to reduce the amount of paperwork (and the corresponding delays) associated with tax filing. According to Pedro Luiz Bezerra, information technology coordinator for Brazil's Federal Revenue Secretariat, his service began encouraging taxpayers to submit electronic tax returns on computer diskettes (using free government software) in 1992. Taxpayers quickly embraced this option, which they found to be less time-consuming and error-prone than paper forms. Bezerra said early experience with diskettes made Brazilian taxpayers even more willing to switch to Internet-based filing when it was introduced in 1997.
Not all countries have embraced the Internet as eagerly as Brazil. Argentina opted for a semiautomated system of machine-readable tax forms that people fill out at local bank branch offices. The forms are then scanned and loaded into a computer network. Mexican tax officials are interested in Internet-based filing, but are just beginning to offer this option.
Officials at the seminar offered hard-learned lessons about the pros and cons of "outsourcing," or contracting out information technology services, as opposed to purchasing and managing them entirely within a tax agency. Representatives from Mexico and Argentina, both of which opted for outsourcing, said private technology companies can usually do a better job of installing and maintaining hardware and software. But they warned that procurements for these services should always be open and competitive, to prevent conflicts of interest, and that contract terms should clearly leave strategic, operational and personnel control in the hands of the government.