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Building a modern Catalan Tax Administration: a case study - EAPC, 1 June 2018

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The Catalan experience on building a modern Tax Administration (2013-2018)

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Building a modern Catalan Tax Administration: a case study - EAPC, 1 June 2018

  1. 1. The Catalan experience on building a modern Tax Administration Barcelona, June 1, 2018 International Congress on efficiency of tax administrations, international cooperation and governance
  2. 2. Contents 2 1. Introduction and context 1. Big issues on multilevel tax administration 2. Catalonia: a quick overview 3. The Catalan tax system 2. Case study: Catalonia, towards a modern tax administration 1. Initial situation 2. Challenge 3. Solution 4. Results 3. Future challenges on efficiency, governance and cooperation
  3. 3. 1. Introduction and context 1.1 Big issues on multilevel tax administration 3 Two important ideas to start with… *Source: OECD (2017). Tax Administration 2017: Comparative information on OECD and other advanced and emerging economies Tax administrations eco-system. 2017* Transfer pricing Cooperation Tax compliance Taxpayer services Innovation Compliance costs Fairness Modern Efficiency Effectiveness BEPS Fiscal federalism Information exchange Dispute resolution Rights and duties Capacitation Integration Digital Transparency Tax fraud Co-creation Governance
  4. 4. 1. Introduction and context 1.2 Catalonia: a quick overview 4 Catalonia is an autonomous community and exercises its self-government in the Spanish State in accordance with the Constitution of 1978 and the new Statute of Autonomy, approved in 2006. The Generalitat de Catalunya is the institutional system around which Catalonia's self-government is politically organized and it dates from 1359. Some basic data of Catalonia 30.078 € GDP per capita (2016) 7.534.813 inhabitants 32.108,2 Km2 surface area Catalan, Spanish and Aranese official languages 13,69 % immigration rate (2015) + info at: web.gencat.cat Source: Generalitat de Catalunya
  5. 5. 1. Introduction and context 1.3 The Catalan tax system (1/2) 5 Catalonia has a competitive fiscal system and the Catalan Government constantly seeks its optimization to promote a fair taxation adapted to the socioeconomic needs and challenges. Catalan tax system summary map Main taxes by level of Government State taxes Generalitat de Catalunya Municipal taxes Inheritance tax* Transfer tax and Stamp Duty* Wealth tax* Tourist tax Sugar tax Taxes on Gambling* Personal Income tax Corporate tax Value Added tax Income tax for N-R Customs and Excises duties Eco-taxes Property tax Motor Vehicles tax Business tax Construction, Installation and Building Work tax Basic regulatory framework General Tax Act (58/2003) Catalan Tax Code (17/2017) Regional Governments Finance Act (22/2009) Tax Administration bodies Secretary of Finance Catalan Tax Agency General Directorate of Taxes Catalan Tax Board Catalan Financial & Research Institute** Financial Council** * State taxes ceded to regional governments. ** Newly created by regulation. Not built yet.
  6. 6. 1. Introduction and context 1.3 The Catalan tax system (2/2) 6 The tax revenue collected by the Government of Catalonia from both ceded and own taxes is quite smaller than the tax revenue collected by the Government of Spain from state taxes in the territory of Catalonia. Tax revenue from state and regional taxes in Catalonia. 2016 58,0% 17,5% 15,8% 6,7% 1,7% 0,4% 0 20 40 60 80 100 Transfer tax and stamp duty Wealth tax Inheritance tax Taxes on gambling Tourist tax Other taxes 40,8% 38,0% 12,1% 3,7% 1,8% 1,8% 0.0 20.0 40.0 60.0 80.0 100.0 VAT Personal income tax Corporate tax Excises Other taxes Customs duties 37,836 M€ 2,826 M€ State taxes Ceded and own taxesTax revenue proportion Total: 40,662 M€ Source: Statistical Institute of Catalonia (IDESCAT)
  7. 7. 2. Case study: Catalonia, towards a modern Tax Administration 2.1 Initial situation (1/2) 7 2013: the worst moment in the financial crisis and most Catalan citizens demanding a strong Tax Administration… In 2013, the new Government of Catalonia started a new legislature in the middle of the worst moment in the global financial crisis, and with most Catalan citizens demanding a stronger Catalan Tax Administration. Source: Statistical Institute of Catalonia (IDESCAT) and Center of Public Opinion (CEO) Social and economic indicators of Catalonia. Pre-, during and post- Financial Crisis GDP interannual variation: Balance of PA to GDP: 2013: -2.1% 2016: -0.9% 2007: -0.6% Unemployment rate: 1T2013: -2.8% 4T2017: 3.5% 1T2007: 4.1% 1T2013: 24.45% 1T2018: 12.19% 1T2007: 6.65% People at risk of poverty: 2013: 24.5% 2016: 22.5% 2007: 20.8% Catalan citizens’ opinion about the convenience of having a strong Catalan Tax Administration. 2014
  8. 8. 2. Case study: Catalonia, towards a modern Tax Administration 2.1 Initial situation (2/2) 8 ... but our Tax Administration had important weaknesses that made it unable to face the delicate situation. Tax Administration, which is responsible for the management of tax system, is a fundamental tool for improving public finances and social welfare. But the Tax Administration of Catalonia had in 2013 significant deficiencies that did not make it possible. Management of ceded taxes and enforced tax collection Greatest weaknesses of Catalan Tax Administration in 2013 Workforce size, training and structure of tax bodies Organizational and Territorial model Anti-Tax Fraud Strategy Interadministrative collaboration and positioning with respect to local governments Information systems capacity and Information capture policy
  9. 9. 2. Case study: Catalonia, towards a modern Tax Administration 2.2 Challenge 9 In order to deal with this situation, since the beginning of the tenth legislature (2013), the Government of Catalonia has worked with one big purpose and 6 strategic goals for Tax Administration: Main purpose and strategic goals for Tax Administration Become a service provider to the Catalan public sector “To strengthen the Tax Administration of Catalonia as a necessary tool to improve the public finances and to deal with the painful social and economic consequences of the financial crisis”. P U R P O S E Exercise all the competences attributed by the regulations Be prepared for the management of any kind of taxes Improve compliance and the fight against tax fraud Transform our organization and enable our workforce Adapt our functioning to the new needs of the 21st century G O A L S 1 2 3 4 65
  10. 10. 2. Case study: Catalonia, towards a modern Tax Administration 2.3 Solution 10 For all this reasons, a 5 years plan was designed focusing on 6 priority work areas to address our goals and change our model from an integral perspective of transformation: 5 years transformation plan BUDGET AND HUMAN RESOURCES IT & DIGITAL TRANSFORMATION DATA AND INSIGHT ORIENTATION COMPLIANCE AND RISK MANAGEMENT INSTITUTIONAL AND REGULATIVE OPTIMIZATION COLLABORATION AND INTEGRATION Work areas
  11. 11. 2. Case study: Catalonia, towards a modern Tax Administration 2.4 Results 11 As a result of the actions carried out during the transformation process… And greater things are yet to come… * 3 of them were declared unconstitutional for the CC (Medical receipt, Credit entities deposits and production of electricity from nuclear origin) 14 new taxes* and 2 bodies created From 4 to 19 own offices From 471K to 963K self-assessments From 840 to +60K enforced debts 557 M€ collected in anti-tax fraud activities (2015-2017) 26.5% of tax gap measured (2014) A multiannual Anti-Tax Fraud Plan with 86 activities (2015-2017) 168 single-window points (TdC) 13 new shared offices 850K debts transferred from 21 institutions 20 collaboration agreements with professional associations (2014-2018) From 325 to 740 employees (2013-2018) 222.34% budget increase (2014-2017) From 13.49 to 25.56h of training per employee/year (2014-2016) 24.27 M€ invested in IT (2015-2017) From 30% to 70% of electronic filling 72% users find the info they are looking for at the website (2017) 10/17 forms available for electronic filling and payment Main quantitative results 162 potential data sources identified 5.33M people removed from databases through data quality processes (2016)
  12. 12. 3. Future challenges on efficiency, governance and cooperation 12 With the previous transformation plan in its final phase, the Government of Catalonia is already working on defining the new objectives and priority work areas for the next years: New challenges for the immediate future Prevent and reduce tax fraud through fiscal awareness, improvement of tax compliance, and the involvement and social co- operation in prevention and tax control activities. Develop a transversal tax administration that provides proximity services to all taxpayers in Catalonia. Promote cooperation and networking to make the Tax Administration more open and collaborative with the different stakeholders in society Consolidate the functional, territorial and digital transformation of the Tax Administration of Catalonia to become a reference administration at European level. 1 2 3 4
  13. 13. www.gencat.cat

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