A less taxing approach

Although Tax and Revenue Administration is only one small division within the Department of Alberta Revenue, which itself is only one of 22 departments in the Government of Alberta, it is proving that big things can come in small packages.

With a helping hand from Web services.

The Tax and Revenue Administration division is among the first of its public sector peers to employ Web services to broaden the reach of several applications and initiatives – in particular, two with highly specific goals.

Web services are essentially Web-based applications that dynamically interact with fellow applications using open standards including Extensible Markup Language (XML), Universal Description, Discovery and Integration (UDDI) and Simple Object Access Protocol (SOAP).

While this may sound like a bowl of alphabet soup, these standards typically work behind the scenes to enable the process of one program literally talking to another and facilitating faster time to response for the public and private sector alike.

Effective Sept. 1, 2002, for example, the Government of Alberta began to levy a players’ tax for the province’s two NHL teams, the Calgary Flames and the Edmonton Oilers. The Alberta Personal Income Tax Act was amended to require all NHL players within the province to pay a 12.5 per cent tax, calculated on the player’s taxable salary during all NHL regular season games played in Alberta after Aug. 31, 2002 until Dec. 31, 2005. The tax was to develop a financial pool to be shared by the two teams.

Although the first of its kind in Canada, the Alberta NHL tax follows in the footsteps of arrangements in several U.S. states and municipalities. However, Alberta is the first to employ Web services to enable teams to file and send information online under the initiative.

“As far as the NHL tax went, it was sort of a pilot for us for Web services,” said David Ho, manager for business support with the Tax and Revenue Administration (TRA) Division of the Department of Alberta Revenue. “We were going to demonstrate to ourselves how effective the Internet was as an instrument in helping us improve our efficiency.”

Ho says the division had two key objectives when contemplating the Web service offering: How could the service allow users to directly interact with the government division via the Internet? And how would the capture of electronic information affect the division’s efficiency?

In addition, Ho says, there was the joint question of what would propel the use of Web services and how to encourage its wide-spread adoption.

“With the NHL application, we conducted a survey and suggested the benefits of developing this over the Internet,” he says. “We got very positive feedback. Anything to eliminate paper is good. Anything to eliminate errors up front is good.”

The TRA turned to Oracle Corp. to implement the NHL application. The division had previously deployed Oracle technology in its client/server environment and broadened that scope to include an Oracle database for its multi-tiered environment, which runs on an all-Oracle back end. “We leverage Oracle and with the direction they are going in, we felt there was an alignment between where they are taking their software and where we want to go,” Ho says.

The TRA is pushing for users to take advantage of the Web services offering. Ho explains that, based on the TRA’s survey and client feedback, the demand is high for instant accessibility. “We needed to find more effective and efficient ways for clients to interact with us,” he says. “That is not to say we shut down all the other channels. People can still file paper with us and we are not going to reject them. But we have strongly encouraged people that we want them to use this technology.”

The TRA says it has received positive feedback to the NHL tax filing service and NHL officials have said that since its inception, the method of tax filing is easy to use.

Fuelling the Web In addition to the NHL application, the TRA recently ventured upon a new Web service, the Tax Exempt Fuel Sales System (TEFS).

TEFS enables bulk fuel dealers to electronically confirm eligibility for purchases of reduced tax fuel, called marked fuel, under the Alberta Farm Fuel Benefit (AFFB) and the Tax Exempt Fuel Users programs. The system also enables a more efficient process for bulk fuel dealers to receive a refund from the Alberta Farm Fuel Distribution Allowance, which is granted to eligible customers.

As part of the Fuel Tax Regulation, which was amended in March 2003, the TEFS system now enables an automated refund process for eligible customers. Under TEFS, refund claims are processed every two weeks as opposed to monthly, as was the previous standard, and the risk to the dealer is reduced when making a tax-exempt sale as information is readily available, virtually eliminating the potential for error, the TRA says.

“The first function of TEFS is to allow users to validate purchases of marked fuel over the Internet,” Ho says. “The other major function is to get the sales reporting from the retailers and bulk dealers of the fuel over the Internet as well. That project really leveraged the technology we used for the NHL application.”

However, as with any leading edge technology, security and privacy are top concerns, more so for the public sector. Since new legislation took effect in January, the public sector has been closely watched to ensure the safety of private sector information.

The TRA has taken the security of information to a higher level, Ho says. The Government’s Information Technology/Information Management Security Committee is charged with creating standard, government-wide mandates, which are then tailored by sub-departments to meet more specific security goals.

For example, while the Alberta government-wide password policy offers detailed information regarding user passwords, the TRA enhances that policy with guidelines and best practices in terms of how to protect those passwords.

“The government-wide policy would say, for example, that users need to have alphanumeric characters that must be eight characters long…and suggest users protect those passwords,” Ho explains. “What we do to enhance that policy is explain just how to protect that password and offer some of the policies we want to implement – such as you should never share your password, never write it down on a piece of paper. Those things may be common sense, but we actually go out of our way to state those suggestions and give people guidelines on how they can stay compliant with those policies.”

He adds that the public sector is extremely conscious of security issues but is constantly faced with the challenge of managing security with constrained resources. Unlike financial institutions that have the ability to charge service fees to pay for enhanced security features, the public sector does not have that luxury. Still, Ho says it is important for the private sector to understand that security is no less a concern to the public sector.

“On the contrary, I believe we are much more concerned about security,” he says.

In order to ensure that security, systems and equipment stay up to snuff, return on investment (ROI) is crucial. Speaking on projections only, Ho says there is no doubt that the TRA will see significant ROI when the numbers come in.

“Looking at our staff alone, they can now concentrate on different priorities,” he says. “When we are able to get a return or a claim in without manual intervention, our staff can truly address the high-risk areas or the more complicated tax returns. ROI at this point is really based on the fact that we can now use our knowledge in other places.”

Carly Suppa is a senior writer at IT World Canada who specializes in a number of areas related to IT, including e-government. She can be reached at csuppa@itworldcanada.com.

SIDEBAR 1:Core Web Services Standards

XML (extensible markup language) The lingua franca of Web services. All Web services can communicate in XML.

SOAP (simple object access protocol) A communications protocol for Web services.

WSDL (Web services description language) An XML-based language for describing, finding and using Web services.

UDDI (universal description, discovery and integration) A phone directory for Web services that lists available Web services from different companies, their descriptions and instructions for using them.

SIDEBAR 2: The battle for Web services

Research company Gartner Inc. predicts that U.S. businesses will squander $1 billion on misguided Web services projects by 2007. Exactly how much of that will come from consumers depends in part on how many confusing, overlapping Web services standards emerge in the next few years.

Right now, it looks like there’s going to be a lot of them.

The Web services standards process began to fall apart this year. No fewer than four organizations — Liberty Alliance, Oasis, W3C and WS-I — are vying to preside over the process, each with different goals, each with differing degrees of power and influence.

And two opposing camps of vendors have emerged: an uneasy alliance of IBM Corp. and Microsoft Corp. versus nearly everyone else. Both groups are busy duplicating each other’s work.

Both are proposing Web services specifications — some proprietary, some not — with unclear patent and licensing implications for CIOs. In an arena as complex as Web services, confusion is not a good thing. But right now, that’s the situation.

The Web services vision is grand: A universal set of communications protocols to enable computer systems and business processes to seek each other out over the Internet, lonely hearts style, and have deep, meaningful interactions with no human intervention. Even in today’s rudimentary state, Web services standards such as simple object access protocol, or SOAP, are proving to be valuable integration technologies. A Gartner survey of 110 companies found that 54 per cent are already working on Web services projects or have plans to begin soon, and IDC (U.S.) estimates that companies will do US$2.2 billion worth of Web services projects in 2003 and US$25 billion in 2008.

And what about the users? Where are the CIOs?

“CIOs haven’t gotten involved because it’s a big time commitment, so they say, ‘You vendors figure it out,'” says Eric Austvold, research director for AMR Research Inc. “That’s like putting the fox in charge of the henhouse.”

If CIOs continue to stand on the sidelines, they may end up with no chickens, forced to choose from among multiple Web services standards that may not interoperate, may have limited life spans, and may come with fees or other onerous patent and licensing requirements.

And if so, CIOs can start ticking off their shares of that wasted $1 billion right now.

You can’t tell the organizations apart without a score card. Here’s a who’s who and what’s what:


What It Is: Founded in 1993 under the name SGML Open, the Organization for the Advancement of Structured Information Standards worked on the standard generalized markup language until XML came along in 1998. Then it shifted its focus to XML and later Web services.

Its Agenda: Oasis focuses on the high-level Web services used in applications. It lets individual technical committees decide whether they want to consider specifications that have royalties attached to them. Members include the U.S. Defense Information Systems Agency.


What It Is: Founded in 1994 by the inventor of the Web, Tim Berners-Lee, the World Wide Web Consortium is famous for Internet standards such as HTTP and HTML.

Its Agenda: Though it has traditionally focused on the Web infrastructure level, W3C has moved into Web services as an extension of its core standards like XML. All submissions it ratifies into standards must be free of royalty fees.


What It Is: Founded in February 2002 by Microsoft, IBM and seven other vendors, the Web Services Interoperability Organization focuses on developing tested implementations of Web services standards in packages called profiles. Sun has called it “a shadow government for standards.” Members include the United Kingdom Office of e-Envoy.

Its Agenda: To deliver installation-ready Web services packages, complete with tools and guidelines.

Liberty Alliance

What It Is: Co-founded by Sun in 2001, Liberty Alliance aims to develop Web services specifications for identity management using security assertion markup language, an Oasis security standard. Members include Canada Post and the U.S. Department of Defense.

Its Agenda: Liberty focuses exclusively on identity management and security issues.

— Christopher Koch, CIO (U.S.)

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