Questions/Answers

Seoul’s tax administration information system initiative aims to realize a trustworthy local tax administration. The system has 3 goals for achieving this objective: • First, to implement a system in which tax information is shared among the Seoul Metropolitan Government (SMG), Seoul’s autonomous Gu district tax authorities, and Seoul taxpayers. • Second, to develop specialized services enabling taxpayers to understand complex tax laws. • Third, to promote prompt and accurate taxation through standardization and computerization of taxation procedures. The following describes Seoul’s current tax administration information system: 1) The Comprehensive Tax System is an internal system shared by Seoul and its 25 districts, each of which administer and manage local taxes by overseeing tax imposition, payment, delinquency, other tax-related investigations, and official retention of license plates. 2) Comprehensive Non-Tax Revenue Collection System oversees tax imposition, payment, and delinquency for over 500 types of extra tax income, including fines, surcharge, and other fees. 3) e-Tax (online tax revenue payment) and mobile tax revenue payment services allowing taxpayers access to tax-related information and tax payment 24/7, 365 days a year.

Since its inception in 1999, Seoul’s tax information system has consistently introduced innovative digital improvements to enhance taxpayer convenience in making tax payments and utilizing tax policy information, thereby promoting equal access to public services as well as citizen participation in tax-related matters. By establishing integrated operation for local taxes and non-tax revenue of the SMG and its 25 autonomous districts, SMG enables all tax officials in the city and its 25 districts to handle taxation tasks through standardized procedures.

Since 1999, Seoul has led the implementation of trustworthy tax administration by using digital technology to operate and manage its tax information system. SDG 9 is relevant because it encourages innovation. Going forward, we will continue to improve our tax administration through digital technology and to maximize the identification of taxable sources to increase tax revenues.

Prior to the implementation of Seoul’s tax administration information system, the city and each of its 25 districts individually handled the taxation, payment, and delinquency for local taxes (11 items) as well as for non-tax revenues (500 items). As a result, tax administration was time-consuming, labor-intensive, and often inaccurate. In addition, depending on the level of tax administration, the quality of tax service differed by institution. Thus, taxpayers experienced difficulty in accessing and understanding tax administration; as a further inconvenience, their taxes had to be paid in person. Further, metropolitan governments were unable to accurately predict tax revenues, rendering precise budget allocations for funding infrastructure investment, welfare programs, and other policies often impossible. With the establishment of the tax administration information system, however, SMG improved the transparency and reliability of tax revenue predictions. SMG currently provides tax reporting services specialized for Seoul through digital technology.

SMG’s integrated tax information system for itself and its 25 Gu districts has delivered efficiency, reliability, and fair taxation through taxation standards. Among the innovations in Seoul’s specialized services are: 1) Integrated point program, usable in both public and private institutions for donations, tax payments, and shopping. Points can also be converted to cash 2) No-fee transactions 3) Real-time taxpayer access to refund status, donations, or money transfer 4) Programs (including Smart Billing) enabling tax payment at convenience stores, via phone, or through virtual accounts.

Seoul’s tax administration information system was the first to be implemented to provide integrated management of tax-related tasks for Seoul and its 25 Gu districts. In 1998, the comprehensive non-tax revenue collection system was established. In 2001, SMG’s online e-Tax service enabled taxpayers to share tax information and pay their taxes anywhere, 24/7, 365 days a year. The services offered through Seoul’s tax administration information system have served as a role model throughout the country and continue to be adopted and developed by other localities.

Seoul’s tax information system has been adapted in other cities across Korea. For instance, in 2006, Korea’s Ministry of the Interior and Safety established the Standard Local Tax System to manage local taxes. In terms of tax payment services, Busan (2004), Incheon (2005), and Daegu (2009) have developed cyber tax services similar to that of Seoul’s e-Tax. In 2006, Korea’s Ministry of the Interior and Safety has developed the WeTAX payment service at the national level. In 2017, Seoul began to provide consultation to Bandung, Indonesia, and Colombo, Sri Lanka for establishing tax information systems.

The initiative to establish a tax administration information system in Seoul has been in development since 1999. Of the resources used for management and operation of Seoul’s tax information system, the first is manpower. A total of 23 SMG personnel have been working in three areas: local taxes, non-tax revenue, and tax payment operation. Approximately KRW 2.1 billion is allocated annually to cover the cost of outsourcing service maintenance and management for the comprehensive taxation system and the comprehensive non-tax revenue collection system.

Seoul’s tax information system initiative will be further developed in line with the changes in the digital environment as follows: First, South Korea has currently entered an era of local autonomy, as decentralization has been adopted as a national policy. It is expected that more interest and investment will be made in taxation management, which is based on local autonomy. For this reason, Seoul’s tax information system will be critical to maintaining the city’s autonomy. There is a strong consensus that Seoul’s local tax information system must continue. Second, to address the economic perspective, tax experts have been recruited to reduce the management cost for Seoul’s tax information system because it has integrated tax-related tasks for both the SMG and its Gu 25 districts. The system identified untaxed revenue and increased the tax collection rate, improving the quality of municipal administration in Seoul.

Yes

Official external evaluation of the initiative was conducted through mVoting (Seoul’s mobile survey and public polling system). Survey questions were entered into the system; the survey was publicized through e-Tax (website) and STAX (mobile app). The survey took place over the course of two weeks, from September 11-22, 2017 under the title “Citizen Satisfaction Survey on the Measures to Make Tax Payments Convenient.”

The indicator used for system evaluation was taxpayer level of satisfaction. Questions in the system evaluation queried factors including frequency of system use; user opinion on the system’s ease of use; user financial medium use; frequency of delays in system use; future user plans to continue STAX use; taxpayer plans to use integrated point service; taxpayer opinion on future development of specialized services, and overall user satisfaction. Initially, the number of respondents was planned to be about 300, but a total of 1,730 people participated in the survey.

Evaluation revealed that 80% of respondents were satisfied with the system, and 75.5 percent answered that services were easy to use. Regarding service delays, 87.1 percent answered negatively. In answer to the question about whether taxpayers used STAX or were planning to use STAX, 92.7 percent answered positively, while 95.3 percent answered positively to the question regarding the use of the integrated point system currently or in the future. Ninety percent of the respondents also answered that Seoul’s specialized services to make tax payments easier should continue.

SMG is working to improve the effectiveness of the initiative, encouraging private enterprises to play an important role in its implementation. SMG also regularly conducts internal and external evaluation of this initiative, and collects and incorporates stakeholder opinions in the initiative. The SMG is seeking global partnerships involving multiple partners who share and mobilize knowledge, expert technology, and finances to support achievement of sustainable development goals in developing countries. In addition, SMG has implemented a regular capacity enhancement policy for city officials in Asian countries to implement effective local tax information systems in their countries. Lastly, SMG is contributing to the promotion and improvement of effective public-private partnerships based on the experiences and funding strategies gained from the implementation of Seoul’s local tax information system in foreign cities.

Through this service, SMG has learned that digital technology applied to Seoul’s local tax administration enables city government to communicate with the public and to become a reliable, autonomous local government. In the next four years, the SMG plans to implement services using Fourth Industrial Revolution technology such as AI, IoT, and chabots; SMG will strive to incorporate new digital technologies of the Fifth and Sixth Industrial Revolutions to Seoul’s tax administration information system.