Taxes without the filing headaches? It's already happening in some countries

In Finland, if you have a straightforward tax return, you don't have to fill out any forms at all. Usingtax data beamedelectronically to the government, each April,the Finnish tax department sends everytaxpayera completed, or in theirlanguagea "prepopulated," tax form.

"The Finnish tax authorities have printed a set ofprepopulatedfacts on your income," says theNordiskeTaxwebsite. "These facts include wages, pensions, receipts of dividend etc."

Under the Finnish system,you don't even have to respond unless there are "errors or omissions." Effectively, the government is admitting thatit already knows all your secrets.

Big Brother?

It may sound frighteningly like Big Brother, but the fact is that all modern governments, including those herein Canada, have access to similarinformation. While some parts of government continue to struggle with secure electronic data (notably, the health care sector), for the Canada Revenue Agency and tax collectors worldwide, computerization has been a perfect fit. And largely, theCRAhasworked out the bugs.

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Come tax time, T-slipsfrom employers, pension plans, banks, investment income sources and other government departments aresent directly to you manyin a paper form. But according to University of Alberta tax expert ChristopherSprysak, you aren't the only one who gets this detailed information about your income and personal finances.

"TheCRAgets the same copy that you do and, in fact, that's uploaded into their system," saysSprysak.

One of the great advantages of this system, according toSprysak, is that unlike fallible humans transferringnumbers from paper forms, computers just don't make transposition mistakes.

Error-free

That's also the reason why theCRAis increasingly encouraging Canadians to file their returns electronically.

"Because theCRAdoesn't re-key the information, there islesschance of errors," saidCRAspokesman PhilippeBrideauin an email.

From my first exposure toBasic andFortranmore than 40 years ago, it was obvious that besides pure math, the things computers did first and best was the kind of data processing that tax departments live for. And while the CBC has been chronicling a decade-long move to electronic filing,Brideausays the process is not yet finished.

"We arealways improving our services to Canadians. When we introduce a new service, we always look to enhance and improve the experience to taxpayers," saidBrideau.

A report on the increase in the use of online tax services from theOECD, the rich country government think-tank, agrees."Revenue bodies'plans give primary emphasis to reducing taxpayers'compliance burden, with improved operational efficiency as a clear secondary goal," says thereport.

Forms still too complex

But some experts in tax filing I spoke to said that, partly because of an irrational fear of numbers and partly because of an excessively complex tax system, many Canadiansare being left behind by the government's move to electronic services.

"For anyone who is conversant with the technology and is able to use tax-preparationprograms, a lot of thatcomplexity is solved for them," says MichaelDeturbide, aDalhousieUniversity professor who studies law and technology."But if you're doing just a paper return, you can understand why the basic simpleT1, people take it to H&R Block now because it's become so complicated."

TheOECDsays one of the ways of reducing the burden on taxpayers is to offer the kind of services provided by Finland, such as "pre-filling" tax returns.

"Pre-fillinghas evolved to become a significant strategy for 'transforming'service delivery in administering the personal income tax in quite a few countries," says theOECDreport. "There are a number of revenue bodies that now offer a fully automated end-to-endprocess, thereby providing significant benefits to their taxpayers."

And according toBrideau, theCRAis already moving in that direction.

New system will auto-populate return

"The newTax Data Deliveryservice marks the beginning of our effort to auto-populate certain tax return fields to ease Canadians' burden with fillingout tax forms," saidBrideau. "Taxpreparerswill be able to receive their client's information directly into their software."

Vern Krishna wrote the book on Canadian taxes, literally. "It's my favourite subject," said the author ofThe Fundamentals of Canadian Income Tax,which has been in print, with updates, for about 30 years.

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Krishna says there is no reason that theCRAcould not follow Finland's lead and eliminate tax filing for millions, maybe even the majority, of Canadians. But he says the Canadian tax system is still catching up.

"The CRA and its system is frankly pretty backward and not as progressive as some countries," said Krishna.

"Of course, they have the data and they have the information," he says, "But they don't use that information in a particularly efficient manner that would make it easier for the taxpayer."

And Krishna is not optimistic that the Finnish system is coming toCanada any time soon.

"Let's put it this way, they're not taxpayer-sensitive," says Krishna of theCRA. "They're more attuned to their own needs and the needs of the bureaucracy."