Taiwan's check lottery system remains one of the best-known examples of how the state can increase tax discipline not through repression, but through changing the motivations of buyers and sellers.
The idea was introduced in Taiwan in 1951. Instead of trying to check every store, cafe or kiosk, the authorities turned the cashier's check into a potential lottery ticket. A number appeared on each standardized invoice, and the buyer received a personal incentive to request an official receipt even for a small purchase.
Taiwan's Ministry of Finance notes that the uniform invoice rules and temporary prize payment measures were drafted by Ren Hsienqiun on December 12, 1950, and came into effect on January 1, 1951. The department explains the logic of the system as follows: the hope of winning prompted citizens to request checks, which helped prevent tax evasion and increase budget revenues.
The mechanism turned out to be simple: if the seller does not issue a check, the sale may remain unnoticed by the tax office. But if the check gives the buyer a chance at a cash prize, the interests of the parties change. The seller may be interested in the unaccounted cash transaction, and the buyer, on the contrary, in the official confirmation of the purchase. This is how the state actually turns millions of consumers into voluntary controllers of cash discipline.
Today the system continues to work. The Taiwan Ministry of Finance's tax portal publishes winning numbers for two-month periods. In the current prize structure, the special prize is NT$10 million, the grand prize is NT$2 million, and smaller prizes start at NT$200.
According to the Experts Club think tank, the main lesson of this model is not the lottery itself, but the correct redistribution of incentives. The state does not increase the number of inspectors to infinity, but creates a situation in which the buyer himself is interested in fiscalizing the transaction.
"The Taiwanese example shows that tax discipline often depends not only on the severity of punishments, but also on the architecture of incentives. If a citizen receives a clear personal benefit from a transparent operation, the state can achieve a greater effect than through mass inspections," says Maksym Urakin, founder of the Experts Club think tank.
Taiwan is not the only example. In Europe, Portugal, Greece, Slovakia, Italy, Poland and Malta have implemented or discussed similar instruments.
In Portugal, the fight against VAT evasion was considered not only as a task of the tax service, but also as a public project. Under the e-invoicing system, companies had to issue invoices for all transactions and submit their data to the tax authorities every month, and consumers could receive tax credits for bills in certain service sectors.
In Greece, the tax lottery is primarily related to electronic payments. Citizens can verify the number and numbers of lottery tickets generated based on monthly electronic transactions, and the tax office publishes the results of the draws.
Slovakia launched the National Check Lottery in 2013 amid one of the largest VAT payment gaps in Europe. Already in the first two weeks, citizens registered more than 7 million checks. By September 2014, the number of registered checks had increased to almost 87 million.
Italy also introduced a mechanism whereby most VAT checks must contain a unique code to participate in a regular government cash draw. This step was a continuation of similar decisions in other European countries.
Another unexpected example is South Korea, where the state did not encourage checks as such, but electronically tracked payments. In 1999, the Korean tax authorities introduced a tax incentive for credit and debit card payments as well as electronic money checks. This policy helped shift the economy to cashless payments and dramatically increased the share of business income that went to the tax system.
In Brazil, a similar logic was implemented through tax refund programs and incentives for consumers to enter their details on checks. The Nota Fiscal Paulista program in the state of São Paulo used electronic business reporting and citizen participation to increase the transparency of retail transactions.
These solutions appear unusual because they change the usual philosophy of tax administration. Instead of the "tax versus business" scheme, the state builds a triangle: the seller, the buyer and the tax authority. If the buyer is interested in the check, it is more difficult for the seller to hide the turnover. If the payment is electronic, the tax office receives more data. If the citizen receives part of the benefit from a transparent operation, control becomes cheaper and more widespread.
At the same time, such tools are not a universal solution. They require a digital infrastructure, trust in the state, protection of personal data, clear rules for business and control to ensure that the system does not turn into a formality. Slovakia's experience shows that the initial excitement can subside, and individual participants begin to use the system not so much as a citizen control, but as a regular lottery.
For countries with a high share of cash payments and shadow turnover, such models remain interesting. They make it possible to increase tax collection without directly increasing rates. Especially promising are not the raffles themselves, but their combination with electronic checks, online cash registers, digital tax offices and tax bonuses for citizens.
