Treasury and SARS leverage AI to improve efficiencies and outcomes

From the humble beginnings of three computers and a couple of data analysts around 2015, National Treasury’s use of anonymised tax data to inform its modelling and policy work has burgeoned into a stand-alone data lab with its own server capacity, security and academics working alongside Treasury staff.

Speaking at the Public Economics Conference on Tuesday, Treasury director-general Duncan Pieterse said one of the big benefits is that while accessing the anonymised data for academic purposes, the academics also help the government to clean and standardise the data.

“The lab has gone from strength to strength over the years, and has been a global example of how a government can use administrative tax data to inform its modelling work and to inform its policy work. Today, the lab in the National Treasury houses anonymised tax data which academics and other government departments can access. For example, we have a panel of a sector of the labour market or taxpayers that we are able to track. That helps us think through the impacts of certain policy changes on taxpayers. There is also a company panel for corporates that helps us track corporate behaviour over time and allows us to make the kinds of assessments on our policy changes that weren’t possible before,” he explained.

Most recently, Pieterse said, a research paper used the data from the data lab to assess changes of the top marginal tax rate on the wealthiest taxpayers. “We were looking at how these taxpayers would respond to changes in the top tax rate, and we could see, for example, that changing the rate would actually bring in a lot less revenue than you would anticipate – because of the way taxpayers are able to manage their tax affairs.”

Speaking at the same conference session, SARS commissioner Edward Kieswetter said government departments working together could improve efficiencies significantly but it was an uphill battle. “Any collaboration in government is like pushing water up a hill. We don’t work well together, but there are things we can do to enable that collaboration. For example, we (SARS) are really advocating strongly for a unique digital identity for every citizen and business, so that, for example, we’ll be able to see if people are double dipping – by tapping into the social grant system while also getting a tax rebate refund,” he said.

https://www.youtube.com/watch?v=cIGq2M94jRI

However, Kieswetter acknowledged that this type of initiative would have to come from the office of the President. “A single digital identity system would strengthen the integrity of the entire financial system. Other countries have appointed a chief information officer or chief technology officer that sits in the office of the President.”

Speaking at a Global Government Forum in July this year, Theo Blackwell, chief digital officer for the Greater London Authority under the mayor of London, said the London Office of Technology and Innovation (LOTI) was a good example of government using AI.

SARS commissioner Edward Kieswetter during the swearing-in ceremony of the new national executive members at Cape Town International Convention Centre on 29 May 2024. (Photo: Gallo Images / Brenton Geach)