Beyond Rio

In an excellent report in CIATalk, Socorro Velasquez has already described the content of our General Assembly.

I will not insist on the excellent and successful experiences that the various speakers shared with us. But I will write about concepts that are, so to say, hot off press in information technologies, some of which were analyzed or mentioned by presenters and by the public.

Topics such as the deep internet, interoperability, the clouds, the Big Data, software as a service, social engineering, security, privacy or its absence, the ubiquity of mobile devices, data scientists and encrypted coins were mentioned. With a little luck, we can discuss them here, or via another media in the near future. Among those “hot” topics, one which almost didn’t appear is the Internet of Things, and that’s what led me to write this post.

Although briefly mentioned by the keynote speaker, and then by Mr Newton Oller de Mello in a question, I must confess that I was a little surprised that this topic did not come out at the panel when Jeffrey Owens invited us to think of the tax administration that we envision in 20 years. Playing futurology will never be easy. But I invite you to practice following a path certainly better known. Let’s try to remember two things: How tax administrations were in 1994 and what were the words in fashion in the information technology field at that time. Perhaps you will agree with me that it was “cool” to talk of “downsizing” to client-server, of cell phones as portable as a brick, and about the “World Wide Web” The first of these concepts had its fifteen minutes of fame and was replaced long ago by the n-layers, first, and later by the cloud. But the two others, the cell phone and the Web, changed forever the rules of the game, both for the lives of people, and for the development of private enterprises and public administrations, especially the tax administrations. By then, it is probable that an ambitious goal for some telephone companies was to have a phone in each house. Today, it is perhaps a Smartphone with the latest technology in each hand.

Without these technological developments, and their overwhelming adoption by the population, some numbers that were mentioned at the Assembly would have been the expression of fantasies and delusions, rather than what they are: statistical measures of successful processes. It would not have become possible to receive an income tax return each 8 tenths of a second on the final day of filing in Brazil, nor certifying 33 million of digital certificates in a day in Mexico, nor reduce the average time for processing a reinstatement from 119 days to 3 days in Spain. Neither would it have been possible to prepare draft returns to propose to taxpayers from data, not from assumptions, and send them to millions of taxpayers.

Today there are many things connected to the Internet. Literally. Some of them are to be used: Glasses, watches, health monitors, and necklaces able to always locate your pet. Others seem to have come out of a program of the Jetsons, such as refrigerators and air conditioners. Using your smart phone to cool or warm your home before you arrive is not bad, or to receive from WhatsApp messages from your fridge reminding you that there are no soft drinks, or to have it sending a purchase order directly to the supermarket. This can seem snobbish. But if the fridge is actually a soft drinks vending machine it may become more interesting, even more if it informs you of the gas pressure, energy consumption, habits of users, etc.

Increased connectivity, the ability to miniaturize sensors and control equipment, the low consumption of integrated circuits and the development of standards for web services makes possible that these developments become popular. The industry expected that the number of devices connected to the Internet will exceed twenty billion in a few years.

How will this affect the tax administration? As much as the Internet itself at the time? I don’t know, but it is likely.

In my report on the Assembly in Rio I gave an example. Not because I claims that this will happen but because technology will soon allow it to be possible. Some of the things that will be connected to the Internet are vehicles. Not only to always be able to determine where we are or where we were – In addition, applications will also monitor the fuel consumption, the tire pressure, the oil viscosity, the coolant temperature…and transmit them every minute, or every second, and with them monitor the driving habits, detect a potential problem, and other things as well. And in a not-too-distant day, we can imagine them taking the wheel themselves.

Indeed, as it already happens with some professional athletes you can try to correct bad driving behaviors, schedule the maintenance of the vehicle when it will be necessary and not when it smells, but other applications are also possible. For example, discounts on insurance policies determined by good driving habits, including the places and times of transits, or inform the nearest patrol when a driving style associated with, for example, alcohol intoxication, is detected.

One of the things that could change is the vehicles circulation tax. Several administrations, although usually local, manage this type of tax. Today you can meet criteria such as the vehicle price with a spirit of tax progressivity; or the weight of the car, thinking of the road wear; or the year of manufacture, thinking about the environment and pollution. Let us imagine that it will be possible to determine these values by fully objective criteria from measurements captured by sensors, GPS devices, antennas and many things in the vehicle connected to the Administration Server via the Internet.

This way, the tax amount could thus be determined according to the exact use of the city roads, at the same time eliminating all tolls; to the use of the public parking on streets and avenues, the wear and tear on the pavement determined by the actual weight of the vehicle; the pollution of the environment measured by sensors during the emission of gases, and who knows, introduce discounts or credits for the efficient use of the vehicle with two or more passengers at peak hours. The system would also be responsible for automatic fines where parking is prohibited, for driving at excessive speed or for not stopping completely at the signs that require doing it. All online, in almost real time. The substantial change of taxable events would be drastic, but also the ability of the State to influence habits and behaviors.

It can be a little scary, or a lot scary. I’m not saying that it will happen; only that technology could make it possible. I hope that when it occurs, if it occurs, we would be able to do it well, to improve things, and not to end up in a macabre story that would remind us of Orwell’s novel “1984”. Technology is not by itself good nor bad. Its use depends and will always depend on us.

Good luck.

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