At the Puerto Rico Information Technology Cluster we believe that the potential success of the implementation of a value added tax system and how fair it could be for Puerto Ricans will depend largely on the strength of information systems that are launched to support it.
There’s no doubt that information systems will impact all processes of the proposed tax system and to the extent that they are properly designed and put into function, the objectives of increasing uptake from evaders and expanding government revenue in a fair and equitable manner will materialize.
Information systems will be key to the implementation of any reform. Let’s use an example of the claim process for the proposed credits. This process should be quick, affordable and efficient. This process should be completely electronic and easy to use to eliminate the bottleneck caused by visits to government offices to take care of tax matters.
The systems should be built upon reliable data that doesn’t lead to errors, otherwise more government bureaucracy will be created, while limiting and affecting the liquidity of individuals and businesses, which would have a negative effect on the economy.
Historically, the Treasury Department has faced great challenges in implementing information systems, which have resulted in much higher costs than budgeted, few of the desired efficiencies, and headache-inducing data errors. The implementation of the VAT system is another challenge and should take into consideration the impact on the economy of merchants (especially all of those in the chain.)
The implementation of the VAT system is an opportunity to create more efficient information systems in which citizens can trust and that also speed up the normal flow of the economy. Otherwise, the government will not get the revenues it expects, the liquidity of citizens and businesses will be affected, and the reform will not have the desired effect.
There are many examples of how poor implementation of information systems have undermined the objectives of other government projects, such as the launch of “Obamacare” in the U.S. and the failed local camera-based fine system. Similarly, there are examples of highly efficient government information systems, such as the one used by the U.S. Internal Revenue Service, which can serve as an example of the efficiencies that are possible with the right technology.
In the Puerto Rico Information Technology Cluster, a nonprofit organization that brings together more than 70 local companies IT, we know that Puerto Rico has the capacity and expertise needed to design and implement information systems that ensure process efficiency and the collections the VAT proposes.
We trust that the planning, development and implementation of the VAT contemplates the support from local service providers and technology solutions so that systems are efficient and robust, since it could otherwise have disastrous results those involved.
The Puerto Rico Information Technology Cluster and its members are available to provide their expertise in this process for the sake of the people of Puerto Rico.