Enhancing IT-Based Tax Payment Systems in Local Authorities in Colombo District in Sri Lanka

Abstract

Local Authorities (LAs) in Sri Lanka have a significant responsibility to provide quality public services and are authorized to collect rates and taxes as primary income sources. The efficiency and effectiveness of service delivery determine the level of public satisfaction. However, inefficiencies in manual tax collection and the limited adoption of IT-based systems have posed challenges, highlighting the need to assess the effectiveness of existing digital tax payment systems in LAs. This study addresses the question: How effective and efficient are the existing IT-based tax payment systems in Colombo District LAs, and what strategies can improve their performance? Accordingly, the research analyzes the Strengths, Weaknesses, Opportunities, and Threats (SWOT) of existing IT-based tax and fee payment systems and identifies strategies to enhance their effectiveness and efficiency. The study focuses on twelve (12) LAs in the Colombo District that currently use IT-based tax payment systems. Data were collected through semi-structured interviews and secondary sources such as legal provisions, policies, and project reports. A qualitative analysis was conducted using the Innovation Diffusion Theory (IDT) as the theoretical framework, as it provides a comprehensive basis for understanding how innovations are adopted within organizations. The SWOT analysis was structured around the five (05) attributes of IDT relative advantage, compatibility, complexity, trialability, and observability, and their parameters. Overall, the findings reveal that the strengths of these systems are substantial, demonstrating that IT-based tax payment systems positively influence the functionality and performance of LAs. Finally, strategies to enhance effectiveness and efficiency were proposed under three key areas: structural development, educational development, and attitudinal development.

Keywords: Innovation Diffusion Theory, IT-Based Tax Payment Systems, Local Authorities, SWOT