Tuesday, January 3, 2012

Social Media Technologies and Tax Administration

Social media technologies  (SMTs)  are the new and personalized face of the Internet.  As described in this note, their arrival and development  bring promises of stratified personal contact and new forms of communication and interaction with potentially large and growing numbers of tax system stakeholders.  This note provides a fairly concise description of emerging SMTs, a brief account of their deployment by the private sector and related experiences, and an overview of how these technologies are starting to be used by revenue bodies in their day-to-day operations.  Clearly it is early days but there are some emerging directions, drawing on revenue body and others‘ experiences:

While the breadth of revenue body experience with SMTs to date and described in this note is relatively limited, it  appears overwhelmingly  positive:  1) they offer  virtually free online word-of-mouth marketing; 2) they enable  positive dialogue;  3) they facilitate the  recruitment of  users for  product testing/  innovation; and 4) they can contribute to revenue administration image building.

Like any new technology, there are challenges and risks to be managed (e.g. provision of misleading information);  however,  these  appear manageable by adopting a properly considered and co-ordinated strategy built on the philosophy of……  start small, monitor, evaluate and build on from there in a similar manner. 

The business case for SMT deployment for the moment largely rests on the potential benefits envisaged from using SMTs to advertise revenue body news, products and developments and/ or conducting dialogue for various purposes (e.g. product testing) relevant to conducting day-to-day tax administration while the up-front investments required are, for the most part, relatively limited and contained. 

The incidence of negative experiences with SMTs reported to date by revenue bodies has, for the most part,  been  minimal and of  relatively little  consequence;  much of what has been experienced can be linked to  weaknesses in setups,  challenges in resource availability, and negative feedback (some tax policy-related).  

As for any technology deployment, there should be a sound business case for SMTs; however, the newness of SMTs and the incremental and exploratory nature of their deployment suggests that such a business case should be viewed more as a medium term objective for revenue bodies, given the need to learn and gain experience around how such technologies can best be utilised for day-to-day administration.  

Successful deployment of a social media strategy lies in the right and purposeful implementation of specific social media tools; this stresses the need to consider the characteristics and relevance of each SMT, insights to which are provided in this note.

Overall development and management of a revenue body‘s channel strategy for service delivery should pay regard to the actual and potential role of SMTs, in particular how they can support and possibly reduce demand for traditional channels.