The best way to collect taxes? Start a lottery

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.”

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.

  • Warun Boofit

    Your final sentence made me smile, I have never used a builder or plumber or mechanic but I suppose some people have money to burn . As for a rural riding school dont make me laugh even more, I suppose I should start asking for receipts from the chip shop and car boot sale. Builders and similar trades as far as I am aware offer dual pricing, the full price if you insist on a receipt and a reduced bill for cash in hand, the difference even for fixing a burst pipe would make for a very expensive lottery ticket.

  • JW

    This sounds interesting. The trouble is that, being British, we would raise £100m in tax revenues but spend £200m administering the thing! If we legalised tax evasion we could save a fortune on chasing tax dodgers. This would have the added benefit of freeing up prison spaces for real criminals – like politicians!

  • Merryn

    Another good sounding lottery… the Speed Camera Lottery in Sweden. If you stick to the speed limit you get entered into a prize draw. If you don’t your fines finance community projects.