The Scope of Tax Administration

Until the new Government Agency for Tax Administration, created under Article 103 of the 1991 Budget Act, becomes operational, the Secretariat General of Finance, an agency of the Ministry of Economy and Finance will continue to be responsible for tax administration. The functions of the Secretariat General are the usual ones of a tax department, including, however, responsibility for both internal taxes and customs duties.

The Government Agency for Tax Administration will have considerable autonomy and a variety of responsibilities. Apart from the functions previously performed by the Secretariat General, the Agency’s responsibilities will include preparation and management of its budget, management of its acquired property, staff recruitment, and centralized accounting for the government taxes administered by it.

Tax Data Processing

The Data Network

The EDP system is a single, integrated system linked by a private teleprocessing network. This makes all applications and all data bases accessible from any tax office. The data network is the most valuable part of the system. It helps us to overcome time and space constraints in our operations with regard to the data available.

Even though much remains to be done, the technological level of telecommunications in Spain has made the integrated system a viable solution. It is obvious that if this kind of integration had not been feasible, another solution would have had to be envisaged. Telecommunications has enabled us to make better and more intensive use of the hardware and software capabilities we have. As Table 1 shows, the data network has 370 point-to-point lines, radiating from the main office to the provincial centers and from these to the administrations and customs.

^{Table 1}.

Spain: Data Network

^{Table 1}.

Spain: Data Network

			1983	1988	1991
Number of teleprocessing lines
	Management centers		0	9	20
	Provincial centers		11	56	56
	Administrations		0	201	204
	Customs		0	0	62
	Other		0	9	28
		Total	11	275	370
Network traffic (Millions of characters a day)
	Electronic mail			0	40
	National data base			60	300
	Files			0	100
	Provincial data bases			1,380	2,800
		Total		1,440	3,240

View Table

^{Table 1}.

Spain: Data Network

			1983	1988	1991
Number of teleprocessing lines
	Management centers		0	9	20
	Provincial centers		11	56	56
	Administrations		0	201	204
	Customs		0	0	62
	Other		0	9	28
		Total	11	275	370
Network traffic (Millions of characters a day)
	Electronic mail			0	40
	National data base			60	300
	Files			0	100
	Provincial data bases			1,380	2,800
		Total		1,440	3,240

Applications Software The software systems used and their main functions are as follows:

• New tax management procedure (NPGT), for management.

• National data base (BDN), for inspection.

• National collection system (SIRENA), for collections.

• Mechanized customs management (GEMA), for customs.

• Regional administrative economic tribunals (TEAR), for the appeals function.

NPGT

The NPGT is the basic component of Spanish tax data processing, which brought about a new era in tax administration. It is a decentralized system, that is, it resides in the 56 provincial centers. The four most important parts of the NPGT are (1) the tax register; (2) self-assessments; (3) annual returns; and (4) notices.

The purpose of the tax register is to identify taxpayers by their fiscal identification number (NIF). The register also shows the tax due by each taxpayer, according to his self-assessed return. At present, there are 722,580 registered taxpayers with the obligation to withhold income taxes on wages and salaries, 2,418,811 enterprises required to make estimated (advance) income tax payments, and 1,831,515 VAT taxpayers.

The purpose of the self-assessment part is to register payments made by taxpayers, usually quarter by quarter. The aim is to control fully these operations, as well as to have participating financial entities collaborate in the process. Taxpayers must submit their returns to a participating financial entity and the entity, in turn, must record the following four data: (1) the NIF, verifiable with a check digit, through which the taxpayer is identified; (2) the number of the return form, verifiable through a control character, through which the item under which the payment is made is identified; (3) the date, which identifies the payment period; and (4) the amount being paid, checkable against the corresponding amount declared. The corresponding magnetic files are processed by the provincial centers. In 1990, 39,109,165 self-assessments were processed.

The main purpose of the annual returns is to process the summary returns submitted by taxpayers once a year, which include the data from self-assessments filed during the year, together with any withholding to which the taxpayer has been subjected. The envelope used to file the annual form should also contain a copy of all self-assessment returns submitted during the year, kept until that time by the taxpayer himself.

The number of annual returns submitted in 1990 was 10 million for individual income tax; 900,000 for net wealth tax; 350,000 for companies; 720,000 reports by income tax withholders; 950,000 for third party transactions; and almost 2 million for VAT.

The constitutional requirement that the individual income tax be progressive and that it also take due account of numerous personal circumstances means that all income earners, above a given amount, have to file a return, even though their income, whether from work or from capital, is subject to prior withholding. It cannot be claimed that the Spanish option is the best compared with other possible options, such as where wage or salary earners do not have to file a return. But the solution adopted in Spain arises out of this constitutional requirement.

The final part of the NPGT is notices, the purpose of which is to get in touch with any taxpayer failing to meet an obligation. The notices cover such items as incomplete returns, requests for further information, full notices (in which all self-assessments that have not been submitted for any tax and for any period are demanded), and notices for annual returns, sent out when the taxpayer declares self-assessments or has been submitted to withholding but fails to submit a return.

BDN

The BDN is used mainly, although not solely, for audit purposes. It is a centralized system accessible on-line from any point in the network. The three original parts of the BDN are (1) identification; (2) information; and (3) preselection of taxpayers.

The purpose of the identification part is to identify the taxpayer, so that he can be matched with information about his activities. The system is very powerful and can identify a taxpayer even from incomplete or erroneous data. So far, about 21 million individuals and 1.5 million legal entities have been identified.

The purpose of the information part is to consolidate all the data received by the tax administration, both from returns filed by taxpayers and from third parties. The total amount of data stored in the BDN is 1.25 billion. These data are used to support the auditing services in their dealings with taxpayers.

Taxpayer preselection assists auditors in selecting taxpayers to be audited. The best results have been achieved through information matching, which makes it possible to compare what taxpayers report with third party information. The most recent step taken in this area is to align the cross-references with the data bases and with the continuous updating of data in the CLASE system, which is discussed later.

SIRENA and GEMA

SIRENA and GEMA are the systems used for managing collections and customs, respectively. These are two decentralized systems located in the provincial centers. At present, their full integration into the NPGT data base is under way.

SIRENA has a very broad range, mainly covering assessments made by the tax authority, payments of settlements by taxpayers, compulsory payments, injunctions, compensations, and deferments. So far, 2,861,078 assessments have been incorporated into SIRENA, not all related to taxes administered by the Secretariat General of Finance, since this organization also collects arrears for some other agencies and certain nontax assessments.

GEMA annually handles more than 65 million import and export declarations. Foreign trade transactions are highly concentrated in a few enterprises and a few customs points. For large enterprises, factory customs clearances are permitted. These enterprises submit their returns once a month on magnetic tape.

TEAR

The TEAR system is independent of the rest because it deals with appeals. Of the four phases of administrative economic tribunals, TEAR deals with three: initiation; preparation of the proceedings file; and enforcement of the decision. It also helps in the decision phase. In this last phase, judgments are automatically generated for cases in which identical appeals are submitted, which has led to a considerable increase in the productivity of the tribunals. There are currently 177,684 outstanding appeals in the system.

Position of Management

Over the past nine years, the Spanish tax administration’s management has had a clear and unwavering position in favor of the use of information technologies, a position that has not only been reflected in the budgetary appropriations for investment in EDP and communications but also in the decision to use them intensively. Management has also consistently borne in mind the difference between building and maintaining a basic information structure, on the one hand, and ephemeral and sometimes showy computer applications, on the other.

If management had not adopted this position, the present configuration of hardware and software would not have been possible, because, when short-term considerations prevail over medium-term and long-term considerations, one has to start anew continually without producing any practical results.

The support of management in the use of information technologies in the Spanish tax administration has not been purely passive. Its active support was critical when the systems were being established, which is when users tend to be most negative, because the cost to them is greatest, often more than the cost of continuing to use the old ways. It is obvious that during this phase, which is when applications have the most teething problems, the support of management is crucial.

At present, management’s support is still necessary because, while it is less difficult to break the inertia, expectations are also higher. This is what is called “the paradox of success,” in that the more successful you are, the higher are the targets set for you.

The use of information technologies in management has varied in parallel with the development of new applications. Their use by various managers has also differed, since all managers are not uniformly enthusiastic about computerization. Appropriate action needs to be taken to promote the use of these technologies. This is one of the challenges currently facing tax data processing, and there is little sign of any major successes on the immediate horizon.

Among the various applications available to the tax administration management, we will mention here INFO, PANINFO, and the monitoring of collection targets. Later, we will comment on other data processing support that are also available.

INFO

INFO (information for management) was established in the NPGT environment as a basis for decision taking and has been extended to all other areas. At present all applications, from their first phase, are included in INFO.

INFO records and makes available to users on-line statistics on data processing applications and the results of such use. This statistical information is very valuable for management decisions and tax data processing itself, since it is, among other things, an authentic measure of the acceptance or rejection of the applications.

The data derived from INFO are tantamount to a constantly updated balance sheet of the tax administration. INFO provides detailed information of the type desired, such as functional (collection, audit, and so on), geographical (such as provincial and administration), or the kind of tax (income, VAT, companies, and so on).

When the INFO application was started within the NPGT, the statistics were updated monthly, and gradually replaced the manual reports that lower-level units send to management centers. At present, updating is daily, in many cases even instantaneous; when an operation takes place, it is “posted.” The information from decentralized INFOs is incorporated into the national INFO both to facilitate comparison between the various territorial entities and to have aggregate magnitudes available.

INFO has been widely accepted, but there is still some reluctance. In some cases there is overlapping with the manual operations that still remain, mainly because of the considerable inertia that exists in such a vast organization as the Spanish tax administration.

Apart from original data, INFO also offers derived data, that is, information appropriately analyzed so as to make it more useful. One example of the type of statistics that INFO provides is the taxpayer census, which gives details at the national, regional, provincial, and administration levels on the taxpayers registered, their tax obligations, their description, their distribution by economic sector, and their VAT regimes.

PANINFO

The volume of data collected by INFO from the NPGT is such that even the smallest details of the activity of the tax administration can be analyzed. However, at times, this vast amount of data makes it difficult to see the overall picture. In other words, there is a surfeit of data in INFO, so that for analytical purposes it becomes necessary to complement it with PANINFO.

The PANINFO application provides for the present and past fiscal years (for the future, the time series will be expanded) aggregated and analyzed INFO data. This facilitates an overall picture of the action of the tax administration, as a prior step to detailed analysis via INFO. PANINFO groups this information in three major segments: (1) statistics on taxpayers, self-assessments, and annual returns; (2) statistics on the effects of tax notices, proceedings, and injunctions for returns; and (3) statistics on the use of information tools.

The PANINFO application has its decentralized as well as its centralized version, incorporating day-to-day data by teleprocessing from the provincial centers to the central office of the Directorate General of Tax Data Processing.

Collection Targets

The purpose of this application is to monitor compliance with collection targets throughout the budget year, according to the selected breakdown. That is, this application makes it possible to establish the targets, adjust them as and when needed, and supply detailed on-line information.

The decentralized application has four subsystems: the establishment of targets, adjustment, confirmation, and consultation.

Targets can be established for the current year and for the following year. Collections for any of the two preceding years can be used as the basis. To establish a target, the reference year first has to be selected and the total figure given for that year. The application allows one to carry out the distribution by budget item automatically, on the basis of the distribution for the reference year, or to do it separately. If the automatic option is chosen, the budget target is distributed according to the distribution of collections for the reference year by item, for the various models of returns, and by month. The data for the established target are presented together with the information on effective collections for the two preceding years, the index of change between them, and the index of change in the target from the reference year. If the nonautomatic option is chosen, the distribution of budget targets can be done in one of three ways: indicating the corresponding amounts item by item; indicating the percentage weight of each item within the total target; or indicating the coefficient of change under each item from the reference year.

Once the target has been set, it can be adjusted as desired. The application makes it possible to do this item by item or month by month. The system enables the user to select any of three options: to change the total amount of the target in keeping with performance; to keep to the previous target, automatically redistributing the difference between the rest of the items in keeping with their weight within the total; or to keep to the target, redistributing the difference between selected items. The function for making the adjustment by months is similar to the one just described.

With the combination of options for setting targets and adjusting them, any simulations considered necessary can be performed, not just at the start of the fiscal year but throughout. The possibility of having up to three targets defined produces more detailed monitoring.

At headquarters, targets can also be set and adjusted using the same methodology as at the provincial centers. Distributions and adjustments can, be performed by territorial level, an option that makes it possible not only to monitor collection targets as the sum of peripheral targets but also as a national target distributed among the territorial entities.

Public Service and Effectiveness

The ultimate objective of the Spanish tax administration is to implement the tax system effectively, to fulfill the constitutional requirement that all citizens bear the burden of public expenditure according to their economic ability.

Within this general framework, the Spanish tax administration’s strategy is based on the notions of public service and effective implementation of the tax system. This involves a series of actions aimed at reducing tax evasion to a minimum, taking into account the following considerations:

• Respect for the privacy of taxpayers, in terms of both confidentiality of the information the administration obtains from them and in the procedures employed.

• The point of reference in the daily work of the tax administration should be the taxpayer and not the organization itself, especially regarding the amount of time the taxpayer spends in his dealings with the Secretariat General of Finance, which should be kept to a minimum.

• Relations between taxpayers and the administration should be as incident-free as possible.

• The reliability of these relations should be increased by ensuring that the taxpayer gets the same answer from the tax administration, regardless of the place or the official dealing with his affairs.

• Reduction of the administrative burden, especially for those taxpayers who produce correct returns, by an efficient selection of taxpayers to be audited.

• Rigor and effectiveness vis-a-vis tax evaders.

Confidentiality of Information and Proceedings

To fulfill its mandate, the tax administration needs resources, of which information on taxpayers is one of the most important. The Spanish legal system regulates what information the tax administration can have and also stipulates that it can only be used in the administration of taxes.

Tax data processing guarantees what is stated in the law through its security systems for data storage and access thereto. Thus, for example, for on-line access, security is extensive. First, the system has to recognize the terminal from which access is being sought, that is, it has to be identified in advance. Second, the user has to be identified. And, third, the user has to use a code word, which only he knows and can change when he wishes. Only after these steps can the user gain access to the level of information he is authorized to access, which guarantees that the information will only be reached by the rightful user.

Apart from these ex ante controls, there are also ex post controls. The system records all accessing, who enters the system, where from, when, whom he consults, as well as the reason or justification for doing so. The system permits on-line checking of access to information, in terms of both a particular user, to check which taxpayers he is accessing, and a taxpayer, to check all the users who have accessed his data.

The ex post control system even records accesses to the controls, which guarantees that the control takes place, and that there is no exception or discrimination. All users are included in the system, from the highest officials of the tax administration to the lowest, as are all taxpayers.

The computerization of the tax administration’s procedures also guarantees nondiscrimination among taxpayers, as the system makes it necessary to apply each procedure in the same way to all taxpayers, guaranteeing that any decision taken regarding them be taken exclusively by the officials responsible and authorized to do so. Identical treatment meted out only by authorized persons cannot be guaranteed under traditional procedures.

This security system is required for all procedures, from the simplest, such as sending a certificate that the taxpayer has sent in his returns, to the most important, such as the decision to attach the property of a delinquent taxpayer.

Taxpayers’ Time as a Measure of Efficiency

In the private sector, strategic decisions on the use of information technologies, like many other decisions, are based on competition among enterprises to gain and maintain a share of the market. There are many examples in which it is precisely the timely and appropriate use of computers and communications that marks the difference between enterprises.

This competitive market does not exist for tax administration; there is no other administration to compete with it, so the motivation has to be other than competitiveness. Spain’s experience shows that management and control of the tax administration through concrete targets, measurable in clear and precise terms, can substitute for the incentive that competition provides for private enterprise, and is, therefore, a way of introducing and of getting information technology accepted and used.

The choice of one way or another of measuring targets is in many cases not neutral. The world looks different, depending on which yardstick we use, and this is true for data processing in the tax administration. The manner of using it will not be the same when it is a question of minimizing the time officials spend on a task, as when the objective is to minimize the time that taxpayers spend on meeting their tax obligations.

The EXPRESS application makes it possible to set targets in terms of taxpayers’ time, which is obviously a good criterion for evaluating a public service and can also promote competition among provincial centers and officials to achieve that target. There are three parts to the EXPRESS application: (1) defining the procedure; (2) monitoring files; and (3) statistics or control.

Reducing Inconsistencies—The Prior Verification of Returns

The classical processing of returns starts with the recording of the data, after which the identity of the taxpayers and consistency of the data in the returns are checked. In case of discrepancies, the taxpayer has to be contacted to resolve them, with the resulting cost both to the taxpayer and to the tax administration.

To minimize these inconsistencies and to reduce the need to contact taxpayers repeatedly, a number of steps have been taken that have had very positive results.

The identification labels and the fiscal identification number (NIF) are used to facilitate the identification of taxpayers. To help taxpayers check both the arithmetical and the legal consistency of their returns, they are supplied with programs to help them prepare their returns or to check them, such as the PADRE program for income tax returns and other programs for returns on magnetic tape containing reports from payers of wages and salaries, dividends, interest on bank deposits, and other reports on third-party transactions.

Since the NPGT was introduced, the tax administration has been providing self-adhesive labels giving the taxpayer’s identification, adding a check digit to the number on the national identity document. With these labels affixed to the tax forms, any possibility of misidentifying taxpayers is eliminated. This procedure has made it possible for participating financial entities to take part in the NPGT in the way that they do, by recording a figure to identify the taxpayers (9 digits maximum), rather than all the data with an average of 80 characters, which would have involved an unsustainable cost. Thus, by establishing the compulsory use of the NIF in tax-related operations, and by giving taxpayers a card with the number on it, the application and therefore the advantages of the check digit have been extended.

The PADRE program helps taxpayers to complete their income tax returns and, in the case of family units, it finds the most advantageous option for them. Taxpayers can go to their provincial center or administration to have them fill in their returns or they can obtain the PADRE program on a diskette so that they can do it themselves. The PADRE program includes an analysis of consistency, which means that returns completed in this way will not contain internal discrepancies.

In 1991, 1,313,004 taxpayers had their returns completed after directly asking for this service, which is the equivalent of 10 percent of all returns. Twenty thousand copies of the program diskette were also distributed, most often to tax consultants.

The programs used to check other annual tax returns work the same way. Taxpayers and consultants are given the same programs used by the administration in its processing. This simple action has saved a significant amount of effort on both sides.

A Single Response to Taxpayers—The INFORMA Application

The Spanish tax administration encourages queries from taxpayers, as tax regulations are not simple and they change frequently. In the 1991 income tax operation we have started using, through the INFORMA application, some basic software developed by the Directorate General of Tax Data Processing to standardize replies to questions raised by taxpayers and to facilitate training of staff responsible for answering them.

The basic software of the INFORMA application makes it possible to perform the following tasks:

• Create data bases of information incorporating the experience of the organization.

• Find the answers to taxpayers’ questions. The function is very simple and it is not necessary for the official taking care of the information service to be a tax expert, which is unavoidable without the INFORMA system. The main advantage of the application is that all taxpayers get the same answer to the same question no matter where they are and no matter which official answers the question. Furthermore, by registering and sorting the questions, the system can determine which parts of the tax regulations the taxpayers find most troublesome.

• Ask those managing the system the questions for which no answer has been found in the system. The managers answer these questions on an individual basis and, if they think it worthwhile, incorporate them into the system.

At present, a software package is being developed that will enable answers to these new questions to be generated automatically, which would give us an expert system, not only because we would have learning bases but also because we would have the capacity to learn without the need to incorporate more inputs from administrators.

The basic software for the INFORMA application can also be used to simplify staff training and above all to ensure that the training is identical for all and is permanently being kept up to date. One application of this type is the so-called procedures manuals.

The documentary data bases held by the Directorate General of Tax Data Processing fit in with these systems. At present, apart from having JURI (from tax jurisprudence), which is run by the Central Administrative Economic Tribunal, we also have the Official Government Journal. These bases are accessible from any terminal on the network.

With the same intention of providing more exact information, in the latest campaign undertaken by the tax administration to send letters to taxpayers who do not submit returns, a new kind of relationship was initiated. It consists of introducing an on-line application by means of which the taxpayer can be told to ask for the reason or the reasons for the letter. This means switching from generic answers, which were provided before this application was introduced, to specific answers.

Minimization of the Compliance Burden—The CLASE System

One important objective of the tax administration is to have efficient systems for selecting taxpayers to be audited, so as to concentrate on suspected tax evaders and not on those who meet their obligations.

The Spanish tax administration has used information technologies intensively in this selection process, and the CLASE system is the most powerful and up to date. It was the first data base the Spanish tax administration acquired, and it was also the first step toward expert systems. Compared with the applications available until then, it represented a very significant increase in the efficiency of the administration in fighting tax evasion.

The basic software of the CLASE system categorizes various elements of a data base and combines them based on their characteristics.

The way in which the user selects taxpayers is very simple. From any terminal in the network and on-line, he can choose the geographical and time frame he wishes and the system offers him a decision matrix through which the user can “talk” interactively with the system until he finds the subset of taxpayers he is looking for. Once the system provides the results he needed to obtain the list of the taxpayers in the set thus formed, he merely presses a key and the screen shows the corresponding listing. From this listing, those making the selection can include taxpayers in the different audit plans.

One further step in the computer applications for selecting taxpayers is the class generator, which makes it possible to share information and experience among all those responsible for selecting taxpayers for audit. It allows the work of the members of the organization to be available for use by all the others.

Decentralized Operations, Centralized Management, and the Basic Framework of a Central Accounting Office

Senior central and local responsible officials of the tax administration determine the targets, and there is an interactive process among them until the targets are actually set. The targets must be uniform throughout the country, although they must be specified separately for each regional and local center. Actions to meet the targets are of an eminently territorial, decentralized character, and take place near where the taxpayers are located, which is a reversal of the centralized process of establishing the targets.

A case to illustrate this is the Central Accounting Office, which is currently being established in the Government Agency for Tax Administration, and which will perform the accounting for the agency and for the Government’s tax revenue. The accounting system followed by the Central Accounting Office will be different from the current system: it will be a single accounting process for the entire country, although details will vary at the territorial level. Under the present system, there is a different accounting procedure for each provincial center, although they are subsequently grouped together.

The new centralized system will be possible because of the computer resources available today and because of the teleprocessing network already in place, which permits on-line updating of the single accounting system, with the elimination of a number of intermediate steps that information technologies make unnecessary.

The accounting plan has to be approved by the Office of the Auditor General of Government Administration. The Directorate General for Tax Data Processing will be responsible for the equipment for the central accounting system. The Economic Financial Department will be in charge of the Central Accounting Office.

The data processing management systems—NPGT, GEMA, and SIRENA—will generate necessary summary accounts data. These summary accounts will be transmitted by teleprocessing, and the accounting automatically will follow the plan approved by the Auditor General.

The Central Accounting Office will provide details on everything from each individual account to all the accounting statements required, updated daily, which will be the basic data source for management.

Maximizing the Efficiency of Administrative Work—Office Automation Applications

Two striking characteristics of the administration’s work are the vast amount of information that has to be processed and the number of administrative tasks. To a large extent, the latter consists of dealing with case files.

These two characteristics make the use of EDP in tax administration so appropriate. A substantial portion of the tax data processing applications already described include what is called office automation. A number of additional office automation tools have also been introduced for the convenience of users.

In the data processing system of the Spanish tax administration, office automation tools were chosen over personal computers (PCs) for two main reasons. First, to avoid the duplication of information and tasks that occurs when PCs are used in a large organization as a basis for the system, with the high cost of maintaining consistency of data or of suffering from their inconsistency. Second, to avoid the creation of closed, self-justifying environments working out their own modest programs and using systems without the required transparency. Obviously, this does not mean that the tax EDP equipment does not include any PCs. They exist and will continue to do so as a part of the system, like any other network terminal with access to the whole system, but with an additional independent processing capacity (albeit with corporate software and tools). In an inspection of software loaded on the tax administration’s PCs that are not part of the tax EDP system, a fairly large number of games and pirated programs were found, a circumstance not peculiar to our organization and indeed mentioned as typical in EDP manuals. The risk that this use involves is very large, and the work time lost very costly.

The office automation system in use provides access from any terminal on the network to a group of very powerful corporate applications. It also gives access to a second group of tools which, in practice, provides all the 9,600 terminals in the network with the capabilities of a PC.

In the first group we have electronic mail, the appointments calendar, and applications for the issuance of reports and certificates and for the design and capture of audit cards and the file (ARCHIVO) application. In the second group we have text processing, calculation sheet, calculator, and the tools for calculating interest on arrears, for calculating income taxes, and for calculating withholdings.

Electronic mail is the office automation application most widely accepted and used in the organization, although its full potential is a long way from being realized. The ARCHIVO application enables one to call up a taxpayer’s file from any terminal on the network, record its formation and the withdrawal of the documentation from the file, its return, and recognize the documents in it. It also allows issuance of documents needed to manage the files, such as the receipts that have to be signed by those retrieving documentation, and reports and requests to those who are late in returning the files to do so.

Recruitment of Computer Staff

The most critical factor in information technologies is the human factor, the need for professionals to design, develop, and maintain applications. This is even more critical in the public sector than in the private sector because remuneration paid by the government is not competitive, which leads to a continual brain drain from the public sector to the private sector.

The annual turnover rate in the tax administration computer staff is 30 percent and the average time taken to fill a vacancy is 18 months. Much effort has gone into resolving this problem, especially in the area of recruitment.

The 1990 Budget Act created a computer corps with three levels of staff—higher, medium, and administrative—because there was no category of civil servants specifically composed of computer technicians. The 1991 Budget Act created the tax specialty for these three categories, together with the Government Agency for Tax Administration to which they were attached.

With the autonomy granted to the agency, many of the problems connected with the scarcity of computer staff can be resolved, by creating a more transparent, broader, and more dynamic labor market that is flexible enough to cover the vacancies that occur. It will also be necessary to structure an administrative career for computer staff so that they have medium- and long-term prospects within the administration and not, as today, the goal of leaving it.

The Right Time and Place

The Spanish tax administration uses information technologies to achieve its targets. With the new hardware, software, and communications now available, the Directorate General for Tax Data Processing is exploring how it can help to provide taxpayers with the most effective public service.

From a functional viewpoint, the present strategy in information technologies can be summed up as an attempt to overcome time and space constraints, in the sense of having the necessary information and the processing capacity at any time and from any place.

To have information available means not just moving from numerical or graphical data to information, but using it for better decision making. It also implies moving from information to the image and the voice, so that understanding can be immediate without the need for prior training or explanation. From the technical point of view, this means using various resources jointly. The use of multiple media will be decisive in the overall consolidation of information technologies at managerial levels and, as in our case, for a closer relationship with taxpayers.

To have the software available at the right time and in the right place means for the users to have open systems that they can adapt to their problems, needs, and capacities. This “customization” means, on the one hand, enhancing the software by meeting the users’ needs and, on the other hand, that users not only accept it sooner and more willingly but also adopt it as their own.

To have the processing capacity means that from any terminal in the network the user can set in motion processes for which he is authorized. To do this, it is not sufficient to have adequate hardware and software; adequate communications facilities are also needed, and this, together with the staff resources, is the most critical factor in quite a few data processing organizations. The Spanish tax data processing system has a substantial and powerful teleprocessing network, but there is an imbalance between hardware and software, on the one hand, and available communications, on the other. From 1993, we expect to be able to make full use of communications satellites, which will mean a major qualitative change and a better balance between communications and the hardware and software currently available.

An Administration Closer to Taxpayers

The data bases, the public information systems, and the technologies of security and protection of access to EDP systems have been used to advantage by the Spanish tax data processing system to help the taxpayer in his dealings with the administration, thereby saving him time and avoiding the need for visiting a tax office.

For example, this year, the PADRE program was introduced in the videotex network, which means that anyone who can access this program can use it to complete his income tax returns. In Spain, in recent years, the number of videotex users has risen considerably, not only in enterprises, but also among individuals, who are installing it at home.

The INFORMA application is currently being installed in the videotex system, so that both professionals and individuals can access it from home, and at any time of day through its 24-hour service. Consideration is currently being given to the possibility of opening a mailbox in this system through which taxpayers can contact the tax office easily.

The technologies for the protection and security of EDP systems are being used in a pilot experiment with tax consultants involving the retrieval of taxpayers’ identification labels. By using this facility, an authorized consultant can access the data base of a provincial center from a PC via the public telephone system and ask for the identification labels. The system offers him the possibility of issuing them on-line from his office or via the provincial center, which will send them to him. This service may be expanded if the pilot experiment is successful. The service eliminates the need to visit a tax office and removes the limitations of opening hours.

In the future, consultants too will be able to access the INFORMA application, and we are sure that a new form of relationship with the tax administration will open up.

Optical Reading and Storage

The full integration of image technologies into the world of data processing and communications is one of the main strategies of information technology. The advantages this would bring to tax administration are considerable, as they open up many possibilities.

Work is currently developing in various directions: on the automation of the processes for classifying and counting envelopes containing annual returns, simplifying and, in some cases, substituting the classical ways of inputting documents and replacing traditional paper files by image files.

The classification and counting of annual returns envelopes is carried out manually, with a high cost in human and space resources and many repercussions arising from the frequent errors committed. The process consists of classifying the envelopes received through the mail from the participating financial entities according to different categories. Thus, in the case of income tax returns, it is according to whether they are the ordinary or simplified model, whether the taxpayer is claiming a refund or making a payment, and whether the refund is to be by transfer or by check. This prior classification is justified by the subsequent order of processing, which is designed so that refunds can be dealt with as quickly as possible. The returns are then grouped in batches of about 100, counted, and passed on to the next stage at which the envelopes are opened, their contents formally checked and, if they are complete, they are accepted and the copy separated for registering and then passed on to the appropriate service. The rest of the contents of the envelope is filed.

The alternative on which we are working in a joint project with a supplier of hardware, software, and robotization components is mainly based on the optical recognition of characters. An ad hoc prototype is being designed for the Spanish tax administration that consists of equipment with a feeder for the annual return envelopes, which optically reads the identity of the taxpayer from the identification label on the envelope. To do this, the labels are already being printed with characters that can be read by this technology. It will also read optically what kind of return it is by reading the bar coding of the envelope. By reading the check marks made by the taxpayer on the envelope, the system will indicate whether a refund or a payment is due, and if a refund, whether it is requested to be made by check or transfer. The system will prepare batches of envelopes automatically, having opened them by mechanical means.

This will not only make the classification more reliable, with a considerable saving in cost and time, but also the identity of all the taxpayers concerned will be immediately available. At the moment, it is necessary to wait for such information until the end of the data entry period, which in the case of the income tax is estimated to occur 100 days after the start of the process. It is expected that by 1992, this type of equipment will be installed in some of the provincial centers that have the greatest work load.

Regarding the replacement of classical entering of information by optical reading, there will shortly be a real-life experiment in the Barcelona Customs, based on the technology and design that are already being used in Germany in the Cobra Project, called the unified customs document (DUAS), which can be used for import and export declarations. The tests already conducted have proved satisfactory and confirm the possibilities of this technology for the tasks of converting information on paper to a digitalized format.

The equipment that is to be installed in Barcelona performs in one hour twice the work that a data entry operator can do in a whole day, as its productivity is 14 times greater and it can work around the clock because the down time required for maintenance is negligible. In economic terms, the equipment will be fully amortized four months after installation.

The optical filing of documents will start with the EXPRESS application in Madrid and Barcelona to evaluate its possibilities and yield. The need for the tax administration to find some alternative to the present filing system is urgent, as a lot of money is being spent on space and people while the users are not very happy with the service being provided. There are two main disadvantages to this technology. One is psychological—associated with the culture of the organization—how to get image-based information accepted, even if it may seem identical to the original document when printed out. This may seem like an insignificant problem but, in fact, is a major difficulty. The other problem is the limitation we currently have on remote image transmission, which requires lines with capacities that the Spanish tax administration currently does not possess. However, the advantages and the savings are so great that they far outweigh all of these difficulties.

The paper presented by Rafael Moya and José-Damián Santiago provides an excellent description of the technology currently applied by the Spanish tax authority, its development over the past decades, and, in some ways, the sophistication of the data bases used in information processing.

Moreover, the paper vividly relates the authors’ personal experiences regarding changes in the Spanish tax authority’s computer system, not only through technological advances introduced into the system, but also through the “in-house plan” they designed to meet the administration’s needs.

I have had the opportunity to assess at close range the dramatic changes in the Spanish tax administration during the past decade, and to exchange ideas with José-Damián regarding his project since 1983. I have also had the privilege of closely following the development of computerization in Spain up to the present time, when there is a special autonomous directorate for electronic data processing (EDP) with a separate budget, as reflected in a sophisticated computer system serving the Spanish tax administration.

In the past decade the Spanish tax administration has increased the speed of computer processing from 36 MIPS to 291 MIPS; the system’s central memory has been expanded from 67 MB to 2,110 MB; its disk storage capacity has grown from 56 GB to 893 GB; the number of terminals has increased from 663 to 9,600; in 1983 there were only 83 printers, whereas now there are 4,493; and the number of teleprocessing lines has grown from 11 to 370, including those in the internal revenue and customs authorities.

Budgetary support for computerization has certainly been of great help to the computer specialists’ work, and there seems to be a clear commitment to continue to allocate a substantial share of fiscal resources to the tax administration for information processing.

Moreover, since the EDP Directorate provides support in collection, audit, and recovery of delinquent taxes, new software packages have been designed to meet the basic needs of the tax administration, such as NPGT (new tax management procedure), BDN (data bases for audit), SIRENA (national collection system), GEMA (automated customs management), and TEAR (programs for regional administrative economic tribunals). In addition, such statistical applications as INFO and PANINFO make it possible to follow up on the administration’s actions, and ONI facilitates control of large enterprises.

All these resources, fourth-generation tools and relevant data bases, together with the expertise of highly specialized officials, have enabled the EDP Directorate to meet the challenge of administering the Spanish tax system effectively.

However, I should like to comment on three aspects of system efficiency.