Case Studies in Merging the Administrations of Social Security Contribution and Taxation

Nothing is stable in social security and, thus, the social security structures and financing mechanisms are constantly evolving.Therefore, governments may need to adapt these structures and mechanisms to the new circumstances, especially those arising after the recent economic downturn. Still remains the question how we can move forward in social security with efficiency and effectiveness with regard to the financing of the social security schemes. An answer to this question could be the far more reaching form of cooperation between social security administration and tax authority in the collection of the social security contributions; this close form of cooperation is the merger of the administrations of social security contributions and taxation.

This report studies the collection systems of five different European countries and gives an overview of the lessons learned from the different practices adopted in this field. These conclusions may help trigger awareness in this particular area of collecting social security contributions. The report may also give an insight for further changes in the national collecting systems of other countries.

This report continues IBM’s long interest in this topic. Several years ago, the IBM Center published Cooperation Between Social Security and Tax Agencies in Europe by Bernhard Zaglmayer, Paul Schoukens, and Danny Pieters. In that report, the authors argued that as social policy continues to evolve, governments now may need to look beyond the traditional structures of social security and taxation. That report made a series of important observations about the potential evolution of cooperation between social security and taxation organizations in the years ahead. This new report expands our knowledge on this important topic.

Case Studies in Merging the Administrationsdministrations of Social Security Contribution and Taxationation When a change like the merger of the collection functions is implemented in a country, one should always keep in mind the objectives of such a change and put emphasis on the successful cooperation between the administrations and the cost efficiency and effectiveness of the new system. Of course, equally important is to invest both in people and structures during the implementation of the merger in the collecting system of taxes and social security contributions.