THE PRECONDITION OF ALL successful tax and debt collection work is that the great majority of people must be prepared to pay their fair share, and have confidence in the way the authorities work. This applies in all countries. If this state of affairs does not exist, it is difficult to collect the statutory taxes and charges or to see that debts are paid. It is therefore important in the long term for our authority to work in a way that creates confidence and that preserves the general willingness to pay one’s share.
Our attitude surveys show us that public confidence in the tax authorities is rising and that confidence in the enforcement authorities is still high. This is gratifying and shows that in general we are moving in the right direction.
At the same time we know that efficient compliance work is one of the most important aspects of maintaining public confidence in the tax authorities. The level of compliancechecking has been falling for some years. This is because of the demand for economies. At the same time there has been a high turnover among staff engaged in compliance work – particularly in the Stockholm area. It is a good thing that we have been allocated increased resources both in 2001 and 2002 for this work. We shall make good use of this replenishment.
In ten years’ time, when we look back on the current period, we will probably see it as a turning point. We have begun the transformation which will make it easier and simpler for people and companies to submit and obtain information. In 2000 we started on the work which has resulted in a group of companies now being able to test the possibility of submitting their tax returns via the Internet. In 2002 we will make it possible tosubmit the simplified tax return via the Internet and in the same year it will also become possible to notify change of address electronically.
These Internet solutions will make things simpler and cheaper for companies and individuals and will also reduce the risk of error. For our own Administration it means, in the long term, more efficient processing of large numbers of cases. This releases resources for improving other areas. Our staff can turn their attention to the important tasks that can only be done by humans, such as investigative work or giving answers to complex questions.
The Internet solutions are only a part of our future interaction with citizens and with industry and the business sector. It will continue to be very important for people who have to submit information to be able to talk to us or meet us. That is why we are currently working to develop many aspects of this meeting – availability by phone, the possibility of visiting us, the clarity of our decisions and the way we receive customers, to mention just a few.
These are important things for us to work on in order to continue to gain confidence and to preserve the willingness to pay one’s fair share.
MATS SJÖSTRAND
DIRECTOR-GENERAL
THE TAX ADMINISTRATION ISA collective term for the National Tax Board and the ten regional tax authorities in Sweden. Similarly the Enforcement Service is a collective term for the National Tax Board and the ten regional enforcement authorities. The regional tax and enforcement authorities consist in turn of a number of local offices within each region.
The taxation system affects all individuals, companies and organizations. The basic task of the tax system is to finance public expenditure.
The role of the Tax Administration is to ensure that taxation and collection of taxes and charges is carried out in a fair and costeffective manner. Another task of the Tax Administration is to determine the rateable values of real properties in Sweden. There are also authorities outside the Tax Administration that have important taxation functions, for example the Swedish Customs andthe National Road Administration. The Tax Administration is also responsible for registration of population.
For society to function smoothly, it is necessary for citizens, companies and organizations to pay the taxes and charges and meet the claims that society or others are entitled to demand of them. The main task of the Enforcement System is to help to maintain legality and equality before the law with regard to payment liabilities and obligations of other kinds. Distraint, eviction and attachment orders are examples of actions which can be taken by the enforcement authorities.
The National Tax Board also has the task of organizing and administering general elections in Sweden. As from 1 July 2001, however, responsibility for organization of elections will be the task of a separate body, the Electoral Authority.
THE NATIONAL TAX BOARD SHARES the common vision of “A society in which everyone is willing to pay their fair share”. Our contribution is simple and appropriate rules and the best possible administration on behalf of the public. The vision is based on the fact that it is by the people that we have been entrusted with the administration of the taxes and charges which have been decided on and with guaranteeing a high standard of morality in society with regard to payment. Our duties also include that of doing our job in a simple and just fashion. It is no less important to do it costeffectively.
The work of the Enforcement Service involves maintaining confidence in the general willingness to pay. We do this by always working to simplify matters and reduce processing times while improving quality. Effective cooperation between the tax authorities and the enforcement authorities is an integral part of these efforts.
An increasing amount of the time of the National Tax Board is now being spent on preventive measures intended to make it easier for the individual and the company to get things right. In many respects this means living up to what people and industry expect and demand of us. We are still working on the targeting of informa tion, improvement of access by phone, expansion of the range of services on the web site etc.
IN 2000 we collected SEK 1 074 000 m in taxes and charges. This is an increase of just over SEK 57 000 m on 1999. Alongside the Tax Administration’s account there is an additional SEK 58 000 m made up of import value added tax (SEK 47 000 m), customs revenue (SEK 4 000 m) and road traffic tax (SEK 7 000 m).
The largest increases are in private individuals’ income tax and employers’ contributions, which is consistent with the fact that more people are in work.
Some of the prescribed taxes and contributions are paid in too late or not at all. Taxes which arenot paid on time are passed by the tax authorities to the enforcement authorities as overdue. It is then the responsibility of the enforcement authorities to collect them. Some of the overdue taxes are remitted for various reasons. The difference between the taxes which then remain noted as overdue and those tax debts which are actually collected is regarded as a loss in the form of uncollected taxes. These uncollected taxes declined markedly in 2000, amounting to 0.42 per cent of total taxes (SEK 4 500 m).
SEK 000 m | |
INDIVIDUALS’ DIRECT TAXES ETC | 486 |
COMPANIES’ DIRECT TAXES EMPLOYERS' CONTRIBUTIONS AND | 96 |
SPECIAL SALARY TAX | 285 |
VALUE ADDED TAX | 130 |
OTHER TAXES ON GOODS AND SERVICES | 72 |
INHERITANCE AND GIFT TAX | 3 |
OTHER INCOME TAXES | 6 |
PAYMENT DISCREPANCIES, NET CHANGES | - 4 |
______________________________________ | |
TOTAL TAXES AND CHARGES | 1 074 |
A LARGE PART of the taxes and charges received goes direct to the treasury to pay for subsidies of various kinds, defence, public administration, the national debt, overseas aid etc. Transfers to households, e.g. child allowance, sickness insurance, parental insurance and national basic and supplementary pension, also account for a large part.
Substantial parts of the revenue from taxes and charges also go to the local authorities to pay for hospitals, education, libraries, child care, care of the aged etc.
THE TAX ADMINISTRATION AND THE ENFORCEMENT SERVICE, i.e. the National Tax Board, the tax authorities and the enforcement authorities, cost just over SEK 6 700 m in 2000. Of this the TaxAdministration accounted for roughly SEK 5 200 m and the Enforcement Service for just over SEK 1 500 m.
Breakdown of costs by area of activity
WITHIN THE TAX ADMINISTRATION the actual taxation side of activities is the largest, accounting for nearly 90 per cent of the resources consumed, whether measured in time or in money.
In 2000 we worked nearly 1 650 000 days and were absent just over 500 000 days. Of these, nearly 110 000 days of absence were due to sickness. The way we use our time has not changed much from one year to the next. The main change that we have been able to see in 2000 is that the proportion of time that we spend on audits is one percentage point less than in the preceding year. In relation to the total time the proportion of time accounted for by absence due to sickness and by training and development has increased by one percentage point in both cases, compared with 1999. The increase on the training and development side is explained by increased recruitment in 2000. The reduction on the auditing side is due to the fact that a comparatively large number of auditors have left the
tax authorities during the year.
7.5 million personal tax returns processed each year
Each year the tax authorities process roughly 7.5 million personal tax returns for private individuals, private firms, limited companies, partnerships and limited partnerships. The income tax assessment for 2000 gave the final tax on income
received in 1999. The assessment was based on 64 million income statements submitted by employers, pension institutions, banks etc.
Two-thirds of taxes are collected through employers
A large part of the tax authorities’ time also goes on processing VAT and payment records which employers declare in their comprehensive tax returns. In their tax returns companies report VAT, employers’ social security contributions, their own provisional income tax and their employees’ provisional tax. In 2000 companies submitted 2.9 million payment records relating to employers’ contributions, 2.7 million relating to PAYE tax and 4 million VAT accounts.
At the end of 2000 the number of registered employers was almost 317 000. This is an increase of almost 20 000 compared with 1999.
The employers have a very important role in taxation in that they prepare income statements for their employees and pay in PAYE (pay-as-you-earn) tax and employers' contributions via the employer’s payment record in the comprehensive
tax returns. In 2000 the employers’ returns resulted in a charge of SEK 285 000 m in employers’ contributions and SEK 427 000 m in PAYE tax. Two-thirds of all taxes are collected through employers.
Over 800 000 private firms registered for VAT
In 2000 there were 827 000 private firms registered for VAT. This was 20 000 more than in 1999. Just over half of them reported their VAT in the personal tax return. Others reported in comprehensive tax returns which have in most
cases to be submitted every month.
The 100 biggest account for 90 per cent of excise duty
There are about twenty different excise duties. Energy tax, alcohol tax and tobacco tax are among the main ones. Excise duties used to be administered by the Special Tax Office in Ludvika, but as from 1 July 2000 this has become a unit in the operations support department of the National Tax Board. The operational side is still located in Ludvika.
The 100 largest payers of excise duty account for just over 90 per cent of the revenue. Revenue from excise duty in 2000 totalled almost SEK 78 000 m, which is an increase of approx. SEK 2 000 m on the preceding year.
Fewer tax returns amended after inspection
In 2000 the tax authorities amended rather more than 1.3 million personal and comprehensive tax returns. This was some ten per cent fewer than in 1999. The bulk of the decrease is in corrections of recording and totalling errors and of
other unintentional mistakes.
We can also see a continued decline in the number of corrections decided on after investigations. The National Tax Board considers that there is still such a need for compliance checks that the reduction in the frequency of such decisions may be feared in the long run to lead to a decrease in confidence in compliance work.
Audits continue to decrease
The number of audits carried out has been declining throughout the second half of the 1990s, from almost 11 000 in 1995 to just over 6 300 in 2000. Audits of Sweden’s largest companies, together with economic crime and tax fraud audits,
are the only types to remain quantitatively at the same or a higher level compared with 1999.
The tax authorities have experienced a high turnover of staff in the auditing field, especially in the major conurbations. This is reflected in the fall in the number of audits carried out. The new staff recruited during the year have not yet had time to have a corresponding effect on the amount of audit work done, as it takes a long time to train tax auditors.
In order to achieve some increase in the frequency of audits and, with it, the visibility of compliancechecking, the tax authorities have in 2000 tried to reduce the scope of certain kinds of audits and also the time taken for each one. This
means that the tax authorities are now being more restrictive in their selection of what to check in the course of an audit.
New compliance policy beginning to have an effect
During 1999 the National Tax Board approved a new compliance policy. One of the starting points of the policy is that compliancechecking should be intended to have a preventive effect. To achieve this effect we believe that checking must be early, visible, unpredictable and accurate. This involves ascertaining the need for
inspection and giving priority to what is most important to check. We must also to a varying and adequate extent check all types of deduction and occurrence, regardless of the amount.
Generally speaking we also have to decide whether service or inspection is the most suitable way of coping with the errors concerned. We know that many errors are due to ignorance or complicated rules. In these cases it is more practical to work proactively than to keep correcting the errors by means of compliance
checks.
In 2000 we think that the policy has begun to have some effect on compliance work. For example the number of amendments to the basis for calculation of property tax has been reduced by 32 per cent. We have deliberately chosen to concentrate more on targeting information at people who have bought or sold properties during the year, with a view to getting the returns correct first time. Certain kinds of timeconsuming investigation, such as examinationsof deductions in the course of employment, have instead been given greater priority and consumed
more resources than in previous years. The reason for this prioritization has been that experience shows this particular area to be one which contains many errors and that a large number of amendments may be expected to have a significant preventive effect.
The year has also seen a greater emphasis on imposing latefiling penalties on those who have submitted their returns after time. Almost 93 000 such penalties were imposed in 2000, compared with approximately 72 000 in 1999.
Action against economic crime a priority
Both the Tax Administration and the Enforcement Service give particular priority to the fight against economic crime. The number of economic crime and tax fraud audits in 2000 rose by just over 5 per cent, the total number being 951. The number of people whom the tax authorities reported for offences has risen by just over 4 per cent to 2000.
Following the extension by the tax authorities of their tax fraud investigation units, there are now roughly 100 tax fraud investigators in the Administration. The increased investment in investigation units has also enabled the prosecuting authorities to pass over a considerably larger number of preliminary investigations to the tax authorities. A total of 463 preliminary investigations was completed in 2000, as against 258 in 1999.
Both the tax and the enforcement authorities cooperate to an increasing degree with other authorities and with colleagues abroad.
Fewer checks on changes of address
The chief purpose of population registration is to keep complete and correct basic information readily accessible for various community functions. Altogether almost
2 million registration items were recorded in 2000. Just under half of these were changes of address. Approximately 60 per cent of them were processed within two
days.
The population registration system records a number of different events in a person’s life. Births, changes of address, emigration and immigration and deaths are recorded in the population register. Details of marriages, partnerships, divorce and changes of name are also recorded.
The information in the population register forms the basis for a number of civil rights and obligations, e.g. the tax and benefit systems. It is therefore very important for the information in the registers to be kept accurate and up-to-date.
As both the tax and the benefit systems are to a large extent based on the information in the population register, a checking system is needed in order to maintain confidence in these systems. The checks made within the population registration system relate primarily to changes of address. In 2000, 100 000 such checks were made, which is 10 000 fewer than in 1999. However the aim within population registration was to maintain checks on changes of address at the existing level. One explanation for the decrease is that while the number of cases has risen slightly, fewer staff have been employed on population registration.
General real property assessment for 2000 completed according to plan
General assessment for real property taxation takes place every second year, when new assessment values are approved. The assessment values form the basis for calculating property tax. Each general assessment involves different categories of property. This rolling schedule means that each property category is assessed every sixth year. In 2000 rental properties and industrial properties, including land for raw material exploitation, special units and power production units, were assessed. The work of assessment has for the most part been completed very smoothly. A total of 299 000 notifications of decisions and 228 500 simplified notifications have been prepared as planned and dispatched to property owners.
Developing service and information
In recent years the Tax Administration has developed and emphasized service and information. Much of this work involves answering telephone enquiries. In 2000 the National Tax Board received 9.5 million phone calls, which may be compared with 9 million in 1999. Not all calls can be answered, but more of them were answered in 2000 than in 1999. The proportion of lost calls fell from 20 per cent in 1999 to 13 per cent in 2000. This means that a million more people received replies to their questions than in 1999.
The service phone, on which forms and brochures can be ordered, received 20 per cent fewer enquiries than in 1999. The reason for this is that more people choose to obtain their information from the Board’s web site. The National Tax Board web site – www.rsv.se – was visited 3.5 million times, an increase of 1.2 million.
THE PURPOSE OF THE ENFORCEMENT AUTHORITIES IS TO HELP maintain legal rights and rule of law with regard to payment obligations and other kinds of obligations. The legal rights and equality before the law of both creditors and debtors have to be preserved. Creditors are those who have claims on someone and debtors are those who have liabilities. When we speak of creditors and debtors with relation to the work of the enforcement authorities we mean those who have not been paid in time and those who have been unable to pay in time.
Enforcement authorities collected SEK 8 000 m
Collection is by far the main activity of the Enforcement Service. The aim is that we should quickly, fairly and with the best possible result for the person who has a claim, i.e. the creditor, enforce his or her established legal right. At the same time we have to take account of the statutory legal protection of the opposite party, the debtor. Most of the work is a matter of collecting debts on behalf of either public or private creditors. Collection procedures deal with two types of case. “A” cases (public cases) and “E” cases (private cases). “A” cases are those where the
state is the creditor, e.g. taxes and charges. Other cases are “E” cases.
During 2000 we have assessed the result of collection work as good, which is largely explained by the favourable economic situation. We have collected almost SEK 8 000 m in “A” and “E” cases, which is the highest figure ever. The healthy state of the economy is reflected in appreciably smaller numbers of debtors and fewer new bankruptcy proceedings. At the end of 2000 there were 567 000 debtors in the debtrecovery register as against 588 000 at the end of the
preceding year, and 12 400 undischarged bankruptcies as compared with 13 400 in 1999.
Decrease in compulsory sale of real property
Compulsory sale of properties is intended to result quickly and costeffectively in sale at the best possible price of properties, tenants’ rights etc. The compulsory sales are made to cover debts when properties or tenants’ rights have been pledged or when such property has been seized for other debts. The number of cases has fallen steadily over the last five-year period. In 2000 a total of 3 600 cases concerning real property came in, and the number of active cases at
the end of the year was 2 500.
More orders to pay – but shorter processing times
Summary proceedings are intended to give a result speedily, simply, fairly and inexpensively in uncontested cases of orders to pay and non-money orders. The different types of cases may concern non-payment, confirmation of distrainability
of pledged property or various kinds of non-money order, for example eviction. The decision of the enforcement authority constitutes what is known as a writ of execution. The writ of execution is often required before applying for, for example, distraint or eviction to the enforcement authority.
The number of new cases rose in 2000 by just over 8 per cent to 571 000. Despite the increase in the volume of cases, processing times have become shorter, 86 per cent of the cases being closed within three months.
More debt reconstruction cases – first rise for four years
The main purpose of the debt reconstruction system is to rehabilitate the finances of the person in debt. It may also favour the creditors in that the debtor pays at least some of the debt. Finally the Debt Restructuring Act is also intended to have a preventive effect, in that fewer people run the risk of becoming overwhelmingly
burdened with debt.
To obtain debt reconstruction the creditor must be so heavily in debt as to be unable to pay his debts as these fall due, this inability must not be merely temporary, and it must be considered that he is incapable of paying his debts within the foreseeable future. The essence of a debt reconstruction is that the debtor is released from liability to pay the debts which are covered by the reconstruction to the extent that these have been reduced.
The number of incoming cases fell steadily between 1996, when just under 5 300 people applied to the enforcement authority for debt reconstruction, and 1999, when some 3 200 applications were received. In 2000 the number of cases rose again to 3 500.
The enforcement authority has the authority together with the debtor to draw up a proposalfor debt reconstruction. If the proposal is accepted by all creditors, the enforcement authority orders (voluntary) debt reconstruction. If the proposal is not accepted, it is passed to the court, which has the power to order (mandatory)
debt reconstruction, irrespective of the wishes of creditors.
In 2000 the enforcement authority made over 2 800 debt reconstruction proposals, an increase of 46 per cent. Just over 1 900 of these led to an order for debt reconstruction. Of these, the great majority, 69 per cent, were proposals which
were accepted by all the creditors. The remaining debt reconstruction orders were made by a court. The proportion of voluntary decisions has risen sharply over the last two years. This increase may be taken as showing that the enforcement
authority’s debt reconstruction proposals are improving in quality, since they are
increasingly being accepted by the creditors. On the other hand the National Tax Board considers the processing times for debt reconstruction cases too long.
Information to upper secondary school pupils and new entrepreneurs
Preventive work is intended to cut the number of new debtors reaching the enforcement authority. Those who come to the enforcement authority are those have been unable to pay their debts. The emphasis of preventive work is on
informing pupils at upper secondary schools and new entrepreneurs at company startup meetings. During 2000 information was given to 70 000 people. We calculate that one in six upper secondary school pupils is reached by information
from the enforcement authorities each year. The information to new entrepreneurs is usually coordinated with information from the tax authority.
Continued decrease in bankruptcies
The enforcement authorities’ bankruptcy supervision is intended to ensure that bankruptcy administration takes place legally, efficiently and purposefully and that bankruptcies are discharged without unnecessary delay and with the best possible result for the creditors. The number of new bankruptcies has declined over the last eight years and was down to 7 200 in 2 000. By comparison it may be mentioned that bankruptcies numbered almost 23 000 in 1992. At the end of the year there were 12 400 undischarged bankruptcy cases.
Fewer employed by National Tax Board
THE NUMBER OF PEOPLE employed by the Tax Administration and the Enforcement System is falling. Over the last ten years the work force has been reduced by approximately 3 000 permanent employees. At the end of 2 000 our combined administration had 12 745 permanent employees. Approx. 9 000 worked for the tax authorities and just over 2 500 for the enforcement authorities.
The National Tax Board employed 1 177 people, of whom 654 were in the IT department. There is a preponderance of female employees, 67 per cent of the total being women and 33 per cent men. In the higher echelons, however, the
proportions are almost reversed, with 42 per cent women and 58 per cent men.
The average age in the organization is 47. It is highest in the enforcement authorities (48), and lowest in the National Tax Board IT department (44). The tax authorities have an average age of 47. Of the Board’s staff, 27 per cent are over 55.
More absence due to sickness, high stress levels
As in other sectors of the labour market, there has been a marked rise in the number of days of absence due to sickness over the last few years. In 2000 the amount of absence was 15.5 days per employee (8.7 in 1996). The National Tax Board is concerned at the increase. From the surveys we carry out within the organization we can confirm with disquiet that the levels of stress experienced at work are very high. At the latest measurement, in December 2000, 40 per cent
stated that they felt that they suffered from heavy pressure at work at least one day a week. The feeling of stress is somewhat more marked among the staff of the enforcement authorities and in our administration is more prevalent among older employees and among women.
BOTH THE TAX AUTHORITIES AND the enforcement authorities are divided into ten regions. Each regional authority is directed by a committee and has a director who is the regional tax com-missioner or the head of the regional
enforcement authority.
The ten head offices of the tax authorities are at Malmö, Växjö, Gothenburg, Linköping, Örebro, Stockholm, Västerås, Gävle, Östersund and Luleå. The regional tax authorities are both divided into a number of local tax offices and have certain regional departments or units. There are local tax offices at 116 places in
Sweden, from Trelleborg in the south to Kiruna in the north.
The ten head offices of the enforcement authorities are at Malmö, Kalmar, Jönköping, Gothenburg, Eskilstuna, Stockholm, Karlstad, Gävle, Härnösand and Umeå. Altogether the enforcement authority is represented at 81 places in Sweden and, as with the tax authority, there are local offices from Trelleborg in the south to Kiruna in the north.
Organizational change will strengthen National Tax Board role
The National Tax Board is the supervising authority of the tax authorities and the enforcement authorities in the country and has the general duty of leading the authorities by allocating resources, setting up goals and guidelines and monitoring activities. It is also the responsibility of the National Tax Board to take
measures to coordinate, rationalize and create uniformity in the administration. Another important task is that of issuing general advice and pronouncing on how tax laws should be applied and issuing directives on implementation of the law. The National Tax Board is based at Solna.
Changes were made to the organization of the National Tax Board in 2000. The main purposes of this were to clarify and reinforce the supervisory role of the Board and to strengthen and improve support to the regional authorities.