International dialogue on tax administration has come a long way in only two decades, since the 1990s; but it is a benign assertion that this change in paradigm is yet to register with tax systems in India. In the CAG 2012-13 report on Direct Taxes in India, there is no mention of the need to use social media technologies for taxpayer relationship management, there is no mandate to harness techniques to manage big data, or the possibility to explore cloud computing options for tax administration. No one is yet speaking of the possibility and potential for sharing and collaboration across tax systems for cost-effectiveness or convenience to citizens. It is harmless to infer that various tax departments in India are oblivious to changes mandated by new technology.
Even as late as 1991, for economists at the World Bank, the “dominant motivation for taxation in developing countries” was “to finance public administration and the public provision of economic and social services. Secondary motivations … the redistribution of income and the correction of market imperfections”. Tax reform was seen “as a component of broader fiscal reform … at the heart of the stabilisation and adjustment process”, and “continued involvement” of the Bank with tax reform was considered necessary in the circumstance of its “work on trade and tariff reform, on the reform of public pricing in various sectors, on public expenditure reviews, and on issues of resource allocation and equity in structural adjustment”.
By 2010 though, the world tax community had reckoned the “rapidly changing environment (in which) revenue bodies are being asked to do more with less, to take on new tasks, and at the same time ensure that governments have the revenues they need to finance important programmes that benefit their citizens”, and the OECD had begun to focus on “dialogue among tax officials on tax administration issues, (to) … identify opportunities for revenue bodies to improve the design and administration of their tax systems”. And, newer challenges for tax administration in developing countries were seen as “combating capital flight, reducing the size of informal economy and helping tax authorities to monitor compliance and collect taxes”.
Appositely, the keynote address by Jeffrey Owens, director, Centre for Tax Policy & Administration, OECD, at the 67th Annual Meeting of Tax Foundation, Washington DC, defined the roadmap for tax reforms: “Fundamental tax reform must by definition go beyond piecemeal changes, and beyond lowering (or raising) tax