Challenges and opportunities of trust-enhancing digital services

Evidence from research

• Taxpayers’ trust in Tax Administrations are both challenged and potentially strengthened through digitalisation
• Digital services can increase trust, but scepticism and privacy concerns remains a factor for many citizens
• Trustworthiness of e-services are important, but so is the citizen’s digital confidence

Taxpayers’ trust in Tax Administrations are both challenged and potentially strengthened through digitalisation

The transformation of public service provision into citizen self-service creates both new opportunities and challenges for public administration in general. This is no less true for tax authorities in particular. In recent years, public administration research has begun exploring how digital services provision raises new types of concerns for public sector agencies (see, e.g., Prins, Raab & Keymolen 2012), though systematic empirical evidence on the comparative merits of various digital solutions is at this point still scarce.

• While new technologies such as data mining, machine learning, sensor technology, and service automation may lead to benefits through further digitalizing service provision and furthering the democratic potential of digital government, the very same technologies could also be used by authorities to restrict, control, and conduct surveillance of citizens (Lindgren et al. 2019).
• Tax authorities also need to be aware that providing digital services to citizens can support but not fully replace the need for in-person communication – a fact made even more salient by the covid-19 pandemic (Alm et al. 2020). At the same time, digital services and capabilities are essential for any tax authority in a globalized world, and the constantly increasing importance of digitalisation for public administration in general and tax authorities in particular show no signs of stopping in the near future.
• Furthermore, the productive potential is undeniable – not only from a taxpayer perspective, but also seen from the tax authority: In a recent Deloitte survey of 1200 government officials from more than 70 countries, 78 percent of respondents indicated that digital capabilities enables their employees to be more responsive to citizens' needs and also foster trust in government and public services (Jeppesen et al. 2020).

Digital services can increase trust, but scepticism and privacy concerns remains a factor for many citizens

Gracia & Ariño (2015) study the extent to which e-government initiatives affect trust in public administration via a web survey of 448 citizens who used public e-services in Spain. They find that the perceived quality of public e-services indeed does have a positive effect on trust in the public administration. However, the study also shows that communication campaigns (i.e., to promote the benefits and use of e-government) only influence trust in the public administration for citizens with a favourable attitude towards e-government.

To affect trust in public administration, e-government initiatives must themselves be trustworthy. Janssen et al (2018) conducts a review of research on the subject within the public administration and information systems literatures in order to identify relevant variables influencing – and depending on – the trustworthiness of digital government. They find that among 19 relevant variables identified, a great majority are drivers of digital trustworthiness, many of which arguably need careful attention by tax authorities in designing digital solutions and services: integrity, trust in government, trust in technology, transparency, responsiveness, competence, accountability, privacy concerns, perceived security, perceived risk, system quality, service quality, satisfaction, perceived ability to use, perceived prior knowledge, and disposition to trust. Here, too, factors like privacy concerns, security and risk are part of the mix along with other relevant aspects related to the potential benefits of e-services.

Trustworthiness of e-services are important, but so is the citizen’s digital skills

Schneider et al. (2020) conducts a controlled experiment with 161 participants of how two types of nudging – default options and popularity signals – affects users’ adoption of electronic identification (eID). They find that both nudges increase eID adoption, but it turns out that default options are a double-edged sword since they simultaneously fuel privacy concerns towards the government. This negative effect attenuates the desired effect of setting the default option to “yes” on eID adoption. However, the study also shows that this challenge can be mitigated by adding social proof cues, i.e. information about other users' take-up of the eID.

Rodriguez-Hevia, Navio-Marco, Ruiz-Gomez (2020) examine which factors influence European citizens in their adoption of e-government services performing regression analysis on a simple random sample of 15434 respondents taken from a 2016 EU survey on ITC usage in households and by individuals. They find that especially digital skills are an increasingly influential factor, previous experience with simple e-government activities (e.g., obtaining information) being the most important aspect thereof. Based on their results, the authors conclude that instead of an access divide among citizens of the EU, a skills divide now seems more and more relevant in terms of e-government services adoption and use across the EU. Thus, e-service quality – and the responsibility of tax authorities and other public agencies in ensuring this through efficient and transparent solutions – is arguably more important than ever.