Reporting to taxpayer - Observatory of Public Sector Innovation

The "Taxpayer Report" is a personalised report that shows each person the total amount of taxes they contributed during the last year and the way in which they were spent.

Innovation Summary

Innovation Overview

The "Report to the taxpayer" is a solution that seeks to increase trust in institutions by making people's contributions to the state and how they were spent transparent.

In the case of individuals who do not file an annual income tax return, a "Calculator for the estimation of taxes and expenses" was provided. This allows to obtain an estimate of the Income Tax and Value Added Tax (VAT) that the person paid during the last year, which are calculated on the basis of their monthly income.

This solution is fully in force for all individuals who pay taxes in Chile, benefiting more than 3,000,000 people.

Innovation Description

What Makes Your Project Innovative?

This solution is innovative in that it fulfils 3 key factors of public innovation:

- It arose from the co-creation of a group of civil servants who drew on their experience with citizens and knowledge of institutional operations.

- It had the support of institutional leadership and authority.

- In order to be implemented, coordination within the state was necessary.

Innovation Development

Collaborations & Partnerships

The solution was developed together with the Internal Revenue Service (SII), the General Treasury of the Republic (TGR), the Government Laboratory, and citizens (around 700 participants) with whom the solution was tested in the 16 regions of the country. For the evaluation, we cooperated with the Budget Directorate of the Ministry of Finance, which has extensive experience in impact evaluations of public programmes.

Users, Stakeholders & Beneficiaries

The main beneficiaries are taxpayers, who can now know in a simple and clear way how much they contributed in taxes and how this amount is distributed. In addition, the SII benefits by improving people's perception of transparency in the use of public resources.

Innovation Reflections

Results, Outcomes & Impacts

An experimental evaluation was conducted to estimate the effect of the report on key indicators. It contained 3 treatments (3 types of reporting) and a control group. Statistical reporting increased perceptions of transparency the most (14% compared to the control group) and had the greatest impact on trust building (7% compared to the control group). On the other hand, the results showed that people did not change their tax behaviour after receiving the report. The report did not have an unintended effect that caused people to want to stop filing or to stop paying their taxes.

Challenges and Failures

Use of evidence in communication with users
There was no transparent communication in Chile on how taxes are used, nor was there sufficient evidence of the effectiveness of this type of mass personalised communication from the state to citizens.

Understanding people's behaviour
Considering the factors that determine people's behaviour, belief formation and perceptions is crucial when carrying out public policy innovations.

Innovate holistically
We can innovate by generating rigorous evidence to increase the effectiveness of communications. At the same time, we can be more empathetic, inclusive and encourage collaboration with citizens.

Replication

The project has not been replicated by other organisations.

Lessons Learned

Generating multiple prototypes and performing impact analysis for internal process improvement and resulting in reporting.

Anything Else?

Following the pilot evaluation, the implementation process consisted of three milestones that have been maintained from 2020 to date:

-The sending of the personalised Report to a universe of more than 3.5 million people annually. The Report was built with automated and digital processes, sent by email, mobile and web version.

-An explanatory website was developed on the SII website that explained in depth the report and also the technical and methodological aspects that guided its development.

A public Income and VAT calculator was developed for non-filers in Operation Income Tax. In this way, it was ensured that everyone has access to the individualised report.