People pay taxes because governments say they must and society says they should. But what if tax compliance became fun?
Governments around the world are encouraging consumers to ask for receipts by turning them into lottery tickets. Taiwan was an early experimenter, in 1951. The past decade has seen a flurry of such schemes: China, the Czech Republic, Lithuania, Portugal, Romania and Slovakia all now have them. Latvia will launch one later this year.
The aim is to make it harder for retail businesses to evade taxes. Worldwide, 20-35% of government revenue comes from value-added taxes (VAT) or similar levies on consumption.
The problem is not business-to-business transactions. When selling direct to consumers, it is tempting to accept cash without recording the sale. The idea of a receipt-lottery scheme is to give customers an incentive to ask for receipts, thereby forcing sales to be recorded and taxed. Receipts are printed with a code that is then submitted into a central lottery, which awards prizes ranging from money to cars and holidays.
The Brazilian state of São Paulo, for example, grants citizens who give their taxpayer number when making a purchase not just a chance to win a prize, but a rebate of 30% of the sales taxes they have paid.
According to a report for the European Commission in 2017, of the ten European countries with the biggest shortfalls in collection of VAT in 2014-15, nine have, or are setting up, a receipt-lottery scheme. (Italy is the exception.) Though a receipt lottery cannot end evasion on its own, says Jonas Fooken, a researcher at the University of Queensland, adding “a bit of magic” to mundane purchases can help.
Article from The Economist (edited)
