Input: S&L tax systems fuel government spending

State and local governments will spend heavily on information technology products and services related to tax and revenue over the next five years, according to a new report.

Reston, Va.-based market research firm Input Inc. reported Thursday that state and local spending on these systems will increase from $325 million in fiscal 2005 to $450 million by fiscal 2009.

But that's a conservative estimate, researchers said. Given the measurable returns that advanced systems can provide and the rising number of successful implementations, Input predicts spending for tax and revenue systems may surpass the forecast.

The market opportunity is fueled by continuing advancements in integrated tax and accounting systems, electronic tax filing, automated collection and delinquency and recovery systems, 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.