Political constraints and business indifference will prevent governments from saving 70% of corporate income tax filing costs through eFiling, according to a new report by Forrester Research B.V. (Nasdaq: FORR). Europe’s governments will only overcome internal hurdles through eGovernment networks that rope in commercial service providers and new Net-based services that win over their constituents, Forrester argues.

“Across Europe, governments chant the mantra of eTaxation — which the European Commission distinguishes as one of the top-eight eGovernment must-haves for businesses by 2002,” said Forrester Associate Analyst Hellen K. Omwando. “But most of today’s eFiling efforts fall short because they merely transpose the same old paper-based tax-filing process online. Governments must instead set themselves new goals that take full advantage of Net technologies, aim eFiling at solving organizational and political issues, and define new processes that bring true benefits to their constituents. To remove internal roadblocks, governments must adopt a long-term approach that accommodates their political constraints and progressively build a new collaboration infrastructure of eGovernment networks that will ultimately span government divisions, technology enablers, private service providers, and the corporations themselves. They should also spread eGovernment networks internally, embrace multichannel access, and recast the civil servant’s role.”

Forrester advises Europe’s governments to tap the interactive opportunities of the Internet to offer new services in a constituent-centric approach that will win over businesses. To do this, they must offer new, richer services that really matter to businesses, transcend security concerns, and involve accounting firms in the eTaxation process to get their SME client base excited about eFiling.

“Crucially, eFiling will pave the way for further transactional eGovernment services like the registration of businesses and properties, and later for the online migration of democratic processes like elections,” Omwando added. “Even as political agendas prevent many public offices from cashing in short-term gains, their actions today can maximize the indirect benefits and the long-term ROI of eGovernment processes. To that end, their strategy must rely on open technologies, organizational change, and the right incentives.

“Governments should not stop at assigning ownership of eGovernment to the central administration level — in many cases the e-Envoy — but instead carry the vision across all government divisions and local administrations by identifying process champions and jointly defining a collaboration road map for each office’s inclusion in eGovernment networks. They must also participate in eBusiness networks as clients. For instance, with €720 billion spent on public procurement, governments should engage in eProcurement — not only setting up their own buying hubs but also allowing contracts to move through eMarketplaces. To overcome businesses’ resistance to change and to convince them of the value of eGovernment services, European governments will have to use the carrot-and-stick approach by offering incentives to win over the unruly and ultimately using the heavy hand of the law through legislation.”

For the report “eFiling Kick-Starts eGovernment,” Forrester spoke with 30 Fortune 500 European companies and 30 government representatives, experts, and vendors.