Tax evasion is a big problem across Europe and some EU countries are looking to use artificial intelligence to ferret out undeclared luxury properties.
It’s causing a lot of concern the news coming from France, according to which the French equivalent of our Inland Revenue Agency is also using Google Maps (to be precise it’s Google Earth) to find luxury properties not declared by taxpayers.
Luxury properties are mainly swimming pools, but also large houses, tennis courts and other artifacts visible from the satellite. Artifacts that, sometimes, citizens do not declare (or declare partially, lying about the size) in order not to pay heavy municipal or national taxes. Google’s satellite platform, then, would be used to do an initial automated verification of where luxury properties are located but that verification would then require a subsequent counter verification by a human inspector. Concerns about such a system also relate to privacy, as there is some superficial talk of “IRS checking from the top.” How are things really?
Google Earth and the French IRS
Let’s preface this by saying that some French local authorities have been using Google Maps, Google Earth or other similar platforms since 2017, but on an experimental basis. The recent news is that from the experimentation soon in France they will switch to the massive use of Google Earth to identify from above the artifacts that need to be declared to the IRS.
It will be done in an automated way: an algorithm will sift through the Google Earth image database to look for groups of pixels that “look like” swimming pools, tennis courts and more. The results of this scan will then be compared with the data on taxpayers in the database of the local Revenue Agency: if Earth shows a swimming pool, but the IRS does not know anything about it, then an alarm bell goes off.
The bell then leads to a verification by a human, who takes in hand the incriminated image and tries to understand if, indeed, the algorithm has got it right by indicating the luxury good. If the algorithm got it wrong, that’s the end of it, if it’s right, a physical check is carried out on the spot, and if the response is not clear, further investigations are carried out.
This procedure would not only have the endorsement of the European Union, but even the economic support of Brussels, which is ready to finance digital projects of this kind to fight tax evasion.
Does it work?
The first results of this new tax surveillance system are not great: the algorithm errs quite often, also because the resolution of the processed images is not very high. Try to make a maximum zoom on your house on Maps or Earth and you will realize that it is not always easy to distinguish a swimming pool of not great size from a blue roof, especially if there are trees or high walls around.
This does not mean that the system cannot be improved, also because satellite images become more defined year after year, while the computer processing capacity grows relentlessly and the algorithms are continuously refined.