With the end of the tax year last Saturday, the Inland Revenue is sending out printed self-assessment forms to millions of taxpayers - and it looks like the vast majority will be used. By midnight on January 31, the deadline for the 2001/2 tax year, IR had collected 324,710 tax returns through the internet.
This more than quadruples the previous year's figure of 76,287, but still represents just 6.5% of the 5 million Britons who complete their own tax return.
Meanwhile, the Australian Taxation Office (ATO) collected 561,645 returns online by mid-December, for the year ending June 30 2002. This is more than 25% of the 2.2 million Australians who have to file a return.
And this year, it intends to take e-tax even further. "Our aim is 800,000, and we are going to stress-test for 1.2 million," says Paul Gregg, director of e-tax for the ATO. Mr Gregg says they expect to get to 50% in 2004 or 2005 - a target the IR aimed for, but is unlikely to achieve.
When launching its service in 2001, the IR set an initial target of 315,000 returns filed online in its first, highly publicised year of operation. It took three years to get there. It then aimed to reach 2.5 million last year, and 3.5 million this year. A spokesperson for the IR said last week that it now has no target for this year.
The IR was criticised last August in a report by the House of Commons' public accounts committee (PAC) for rushing the system's introduction. "It was chaos and disaster," says Edward Leigh, Conservative MP for Gainsborough and chairman of the committee. "They launched it too rapidly, and couldn't meet expectations." The PAC report recorded that, early on, four out of five attempts to file a return electronically failed.
The ATO benefited from having a similar online system for tax accountants. Three-quarters of Australians use an accountant for their taxes, and now 95% of these returns come in electronically. A similar service was launched in the UK in 2001, after online filing for individuals.
E-tax was piloted for two years in 1997 and 1998, followed by a low-profile launch. "If you go for a big bang approach, it's hard to predict what you are going to need in terms of infrastructure," says Mr Gregg. "And if you get it wrong, you may alienate hundreds of thousands of potential users."
One reason Australians like the electronic system is that three-quarters of tax returns generate a refund in two weeks, compared with six weeks for those using paper forms.
In its first year, the IR offered £10 to online users. There is some justification for this: the PAC report said that the IR saves £3 for every report filed online, and could increase this saving to £30m a year, if half of its returns came in online, cutting 1,300 jobs.
Edward Leigh says he is pleased that the IR increased the number of returns it has collected online since the report last August. But he thinks it should reintroduce discounts - and make them bigger. "You've got to give people a real incentive to change the habit of a lifetime," he says.
With e-tax working well, the ATO has been fine-tuning. Last year, users could claim a 'baby bonus' - the equivalent to the UK's child tax credit - with e-tax. This year, it will take less time for the software to download, and users who kept a copy of last year's completed e-tax return will be able to use it as a template for this year's.
The language has been simplified, and the interface redesigned to look more like the printed tax return. Paul Gregg thinks there is probably a maximum of 1.2 million Australians who will use a software download for their taxes, so the ATO is trying other methods. "One is a simplified tax return, a short [paper] form. That could become electronic. We also have a pilot of telefiling [over the phone], once again aimed at those with simple affairs. In the future, we are going to have e-tax for broadband users, where rather than having a download, it would be browser-based." This last option should be available in the next couple of years.
Meanwhile, the IR says it has no plans to introduce major alterations to its software. One problem is that the service has to be available constantly, as UK small businesses can choose when to end their financial year. In Australia, e-tax only has to work from July 1 to mid-December.
The ATO certainly had some advantages, but in launching e-tax, it avoided the problem that dogged UK e-government services, such as the Environment Agency's flood information site, the 1901 Census or the IR's online tax system: a high-profile launch followed by capacity problems, resulting in widespread bad publicity.
Australia and the UK share a liking for building something up, then knocking it down: the Australians call it tall-poppy syndrome. The ATO has grown its poppy slowly - and quietly.
Tax links
Australian Taxation Office
Inland Revenue's tax site
Public accounts committee report
www.publications.parliament.uk
