Taxpayers deserve better than this

By Adam Gifford

Between the lines

Inland Revenue and its contractor EDS (Electronic Data Services) have made a monumental botch of a laudable plan to encourage electronic filing of tax data.

The project shows all the symptoms of why state sector information technology projects go wrong: fuzzy grasp of the technology available, a rushed timetable, and an immovable deadline.

It also has the peculiar cultural attributes of a department feared and reviled by taxpayers because it is too quick to turn on them with regulation and fines rather than fix its problems.

The ir-File system is compulsory from April for firms which pay more than $100,000 in PAYE annually. Others can join voluntarily.

The IRD went to the market with the specifications for the ir-File system, and EDS said it could deliver.

Rather than ask for an "open" Internet solution, which is hardware and operating system-independent, the IRD specified that the system should run on what it perceived to be the most popular operating systems: Windows '95 and up, and recent versions of Macintosh. EDS put together a number of package solutions which relied on key bits of Microsoft technology.

Everyone who will be filing PAYE data to IRD will be given a unique digital certificate which he or she must put on the computer the data will be filed from. When the taxpayer accesses the IRD site through a Web browser and pushes the send button, the application will use a bit of Microsoft Active X code to go looking on the operating system for the digital certificate, which will generate a digital signature to attach on the message.

The message cannot be altered later. The IRD or its customer can stand up in court and say the message was sent at a particular time and contained the data.

The solution does the job the IRD wants, but only on a PC running a Windows operating system. It doesn't work on a Macintosh operating system, because the Mac puts digital certificates in a different place. That is something EDS and the IRD found out too late in the development process to seek alternatives.

The IRD has assumed it is acceptable to develop a Microsoft-only solution. This means that those who, for business or technology reasons, want to use operating systems such as Macintosh, Solaris or the fast-growing Linux platform, must spend several thousand dollars buying a box they do not want to run the IRD's application - as if tax compliance costs aren't high enough already.

The IRD is delivering to Microsoft just the sort of competitive advantage the United States Justice Department is attempting to put limits on.

It's time for IRD to step back, put aside its coercive power, accept that it made a mistake and look for alternatives.