The best way to collect taxes? Start a lottery

Slovakia’s new monthly lottery has increased its take of sales tax by over half a billion euros.

I've written a few times about the rising size of the black economy in the UK.We aren't the only place struggling with it. But, while we deal with the problem with moralistic soul searching combined with a confused mix of amnesties and threats, some other countries are taking a rather more pragmatic approach.

In Slovakia, the government has come up with a new lottery concept. You collect your receipts from all your transactions and register them on a government website. Those registered are then entered into a monthly lottery for prizes including €10,000 and a new car.

This, says the New York Times, encourages people to demand receipts and then creates a paper trail for transactions and forces "restaurants and shops to pay the sales taxes they owe."

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It works. So far 450,000 people have taken part, some 60 million receipts have been registered, and 7,000 complaints about merchants not issuing receipts have been made (up from 300 in the six months before the lottery was introduced).

And tax revenues? It is impossible to tell how much of it is down to the lottery, but sale tax revenues rose by €512m in 2013.

It's hard to tell if it would it work in the UK. But given that the lottery in Slovakia cost a mere €276,000 to start up I can't see how we could lose by setting one up here and allowing anyone who can produce a proper traceable receipt from a builder, a plumber or perhaps a rural riding school to enter.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.