How tax authorities are more empowered – and possibly more empathetic

Kate Barton, EY Global Vice Chair of Tax, says 2021 will be the year of reimagining: organizations will be implementing recovery plans to help them rebound from COVID-19 pandemic, and will have to make strategic decisions that respond to changes triggered by the pandemic, which look like they're becoming our new normal.

For tax, that change will be profound. We’re witnessing a major elevation in the role played by tax authorities in our society. Governments have woken up to the fact that their own tax authorities contain vast troves of invaluable data on their citizens and their businesses. Moreover, they’re probably their best way to connect to them. It's tax authorities who issued stimulus checks, funneled loans to small businesses, and even contact-traced citizens to track exposure to COVID-19 virus. And when governments pivot from stimulus to tax hikes, it’s tax authorities that will be charged with navigating that particular policy high wire.

How far can this elevation of tax authorities go? With enough investment, and the digitization of all transactions, could they become so sophisticated that they mimic consumer-facing big tech? If tax authorities collect enough data, from every single taxpayer, in real time, can they remove any disagreements on the tax that's due? And if tech removes tax controversy, could we see the birth of the empathetic tax administration?

Host Simon Hobbs and EY’s Kate Barton are joined by business consultant and thought leader Dr. Tassu Shervani, Professor at the SMU Cox School of Business in Dallas, Texas.  

Key takeways:

• The  governments around the world are realizing their tax administrations are a trove of invaluable data.
• Developing countries are leading the adoption of technology to enforce tax collection.
• With a central role in driving the response to COVID-19 pandemic, tax authorities are becoming increasingly empathetic. That’s balanced by the need to collect revenue to pay for essential social programs.  
• We’ll see a huge increase in the variety of taxes, and the methods authorities use to collect them.
• Corporations must wake up to the volume of data that governments have about them, and how they’re sharing it.

For your convenience, full text transcript of this podcast is also available. Read the transcript.