The Economist has an interesting survey section on this.

Why is government unable to reap the same benefits as business, which uses technology to lower costs, please customers and raise profits? The three main reasons are lack of competitive pressure, a tendency to reinvent the wheel and a focus on technology rather than organisation.

Governments have few direct rivals. Amazon.com must outdo other online booksellers to win readers’ money. Google must beat Yahoo!. Unless every inch of such companies’ websites offers stellar clarity and convenience, customers go elsewhere. But if your country’s tax-collection online offering is slow, clunky or just plain dull, then tough. When Britain’s Inland Revenue website crashed on January 31st—the busiest day of its year—the authorities grudgingly gave taxpayers one day’s grace before imposing penalties. They did not offer the chance to pay tax in Sweden instead…