miércoles, 22 de enero de 2014

Digitalisation of governments implies #SmartTaxing

The digital revolution is here and it is disrupting almost all the business models known until today. In all the cases, the disruption comes from a disruption of its foundation: The transaction model of the service. We are moving towards a world of low cost but high volume of transactions.

Governments are also moving to digital by default. Nevertheless, there is a reluctance from politicians to change its business model. And this business model depends on how they tax citizens and business. The taxation model is not taken all the advantages of the digital era, and this could be one of the reasons why the high government deficits are stable and a high level after the massive bail-outs at the begining of the current crisis.

It is needed a reform of our taxation model, and in a digital era the only way forward is a low cost but high volume taxation model.  We can try to maintain the model  with a high cost but low volume taxation model for companies and the big fortunes, but as we have seen the consequence in the digital era is obtaining less and less money from the high-end contributors.

And we have the tools for changing the model.

On one hand, we could make redundant the physical money. And this is not a far away utopia, smatrphone penetration is on the rise (see table) and making compulsory to use the smartphone as a payment tool with a jointly dissapearance of physical money could be planning for the medium term. For instance, in Spain there will be nearly a quarter of the population with smartphone in four years. This way, any economic activity would leave a digital footprint, and therefore be taxable. 

On the other hand, the Internet of the Things open new sources of data, and therefore information, for taxation on the usage of public infrastructures. It is not only the untapped possibilities of the smartphone (again) it is also the opportunity to include sensors in the instruments associated with the usage of the these public infrastructures. Cars are one of these instruments, and the debate about including sensors and re-engineer the taxation models for taxes based on their usage of roads is on the table. But there are other daily elements where a sensor could be set for taxing purposes. For instance, your trash bin could be the center of a tax-by-weight model.

Something I would like to highlighted. This "pay as you go" model for taxes does not imply some taxes for all for the same actions.That is another advantage of the digitalisation. The taxation system based on "pay as you go" could be fairer, because thresholds could be established with different level of taxes. Even, tax discounts could be possible to be established if you provide a sensor service to the community .

Digital by default in government means something more than a paperless government, implies the need to change all its business model and its sources of revenue. In the end, the flood of information provided to the government by the digital revolution should serve to develop "smarter pricing policies to regulate supply", or what it is the same to create the #SmartTaxing concept.


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