Name:Søren Duus Østergaard
Institutional Affiliation: IT University of Copenhagen
E-mail address: email@example.com
Paper Type: Traditional
Paper Title:The Danish Tax System and the 'No Touch' Strategy
Paper Abstract: In 2004 the Danish Tax Administration won the Danish e-Business price for successful implementation of the 'no Touch' solution TASTSELV which provides the Danish tax payers with a unique, fast and accurate solution handling pre-assessment of income and tax declarations. This paper describes the milestones towards this result which is based on several decades of development of IT-support leading to a World Class taxation system.
The early days – Birth of Datacentralen
Already in 1958 the Minister of Finance invited a group of IT specialists and public servants to lay out the foundations, barriers and prerequisites to develop a 'pay-as-you-earn' (PAYE) taxation system.
In 1959 the first recommendations were ready which led to the creation of I/S DATACENTRALEN on Dec. 17, 1959. This organization took over the existing Unit Record installations from central Government, acquired ‘computers’ and started to develop the new tax system. The organization was created as a joint organization between central government, local government, and counties.
Supporting systems and launch of the PAYE
As it was a clear prerequisite that each tax payer could be identified, this lead to the development of the Danish Citizen Registration System. So in 1968 the CPR-system was established, in itself a milestone for the further development of social benefit and illness insurance systems.
Also the employers would need to have a unique identification, and here it was already partly established as the income related common supplementary pension system ATP was enacted in 1964, which required a central database of employers. This was later developed into the Central Employers Register, the CVR.
With these prerequisites in place the PAYE system was launched in 1970, one year delayed. At the same time the first major municipal reform was taking place reducing the number of local authorities from 1300 to 277, and simultaneously a major change in the organization of the local tax authorities. The local government data centers were merged into Kommunedata and the borderline between Datacentralen and Kommunedata had to be re-defined. In spite of these major organizational changes the PAYE system was effectively launched.
Dawn of the Internet – the ‘No Touch’ strategy
In 1993 the Customs & Tax authority launched the voice response system offering citizens to check and change their pre-assessment using the telephone. Security was provided via a pin code. Already in 1996 more than 600.000 taxpayers used this. Use of the Internet as input system was launched in 1995. Later it provided full access to assessment and declarations, so already in 2004, 44% of the tax payers used this service while 23% still used the voice response system.
This paper will describe, how the breakthrough of pre-filled in tax returns, use of digital tax file, and tax payers reporting of bank account info was gradually developed. This effort was backed by the first official Danish e-Government Strategy, published in 1999, and headed by now former MEP Lone Dybkjær.