Local governments expected to spend on tax systems

Spending by state and local governments for tax and revenue systems will increase significantly over the next five years, according to a new report from a market research firm.

Input Inc. of Reston, Va.., said Thursday that state and local spending on IT products and services for these system will increase from $325 million in fiscal 2005 to $450 million by fiscal 2009.

But that's a conservative estimate. Input predicted that spending could surpass the forecast, because the systems are beneficial. Advancements in integrated tax and accounting systems, electronic tax filing, automated collection and delinquency and recovery systems deliver a high rate of return, and there are many successful implementations to serve as models, Input said.

'While tax and revenue system initiatives were among those delayed or canceled by state and local governments during the recent budget crisis, new tax and revenue systems are increasingly being looked at to improve cost efficiencies in operations,' said James Krouse, Input's manager of state and local market analysis.

Input said IT contractors should be open to alternate funding methodologies to be successful in the tax and revenue vertical market.

'Government jurisdictions are continually reviewing creative funding methods in tax and revenue collection, whereby tax receipts and savings in efficiency self-fund new systems, eliminating the need to dip into tight general funds,' Krouse said.


About the Author

William Welsh is a freelance writer covering IT and defense technology.

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