Essays on information technology in tax administrations: a review of literature and brazilian evidence of impacts on collection

Abstract

Information Technology (IT) plays a fundamental role in the reform of any tax administration, enabling better collection and analysis of information, proactive management of workload and resources, promotion of cooperative engagement and standardization in the treatment of taxpayers, thus facilitating uniformity and application of tax legislation (Jimenez, Mac An tSionnaigh, & Kamenov, 2013). Given this perspective, this thesis explores the use of IT in tax administrations, consisting of three essays. The first essay consists of a Systematic Literature Review (SLR) that seeks to comprehensively analyze the current literature on the intersection between Information Technology (IT) and tax collection. The RSL was conducted following the protocol proposed by Tranfield, Denyer, and Smart (2003) and identified three research clusters: the impacts of IT on tax collection, the factors that influence the adoption of technology in this context, and the aspects related to IT and its application in tax administration. Alongside these clusters, we present the main theories used and the main challenges identified for the implementation of IT in governments. Finally, we propose our research agenda. Among the technologies identified in the RSL, standardized electronic tax systems stand out, as explored in the second essay of this thesis. The objective of the second essay is to analyze the effects of adopting this system on the tax collection of municipalities in a Brazilian state. Using a database composed of 146 municipalities in the state of Rio Grande do Norte, from 2013 to 2018, the study initially uses a panel with two-way fixed effects. Then it applies the differencein-differences approach proposed by Callaway and Sant'Anna (2021). The results reveal that the adoption of standardized electronic tax systems resulted in an average increase of approximately 52% in Urban Property and Territorial Tax (IPTU) while the Tax on Services of Any Nature (ISSQN) recorded an average increase of around 43%. Examining the effects over time, we found that IPTU collections increased on average by approximately 77% after the third year of the system's implementation. On the other hand, ISSQN revenue increased by an average of 72% after the fourth year of adoption of the aforementioned system. The third essay addresses the use of another technology, the Electronic Consumer Invoice (NFC-e). It aims to analyze the impact of the NFC-e project on the Tax on Circulation of Goods and Services (ICMS). The database used is made up of 4,652 municipalities in Brazil, from 2013 to 2016, and uses the differences-in-differences approach of Callaway and Sant'Anna (2021). The results of this test indicate that the adoption of NFC-e impacts municipalities in different ways depending on their size. Larger municipalities had more substantial increases in the transfer of participation installment in the ICMS per person. Specifically, in the simple effects, large size municipalities recorded an average increase of approximately 3.6% per person, while medium size municipalities recorded an increase of approximately 2.7% per person. About dynamic effects, large size municipalities showed an average increase of around 18.6% per person two years after the states implemented the policy. It is concluded that IT plays a significant role in tax administrations, offering substantial benefits. This is evident through the implementation of standardized electronic systems and NFC-e, which significantly contribute to improving municipal revenues.