Lottery of receipts, that's why the government's anti-evasion move may not work – Repubblica.it

The fiscal decree linked to the Budget Act 2020 has given a new impetus to the measure known as the "receipt lottery", already introduced (but so far not implemented) by the Gentiloni government in the maneuver for 2017. The basic mechanism is quite simple: every purchase that leads to the issue of a receipt entitles you to participate in a periodic prize draw.As for other recently proposed tax provisions (sugar tax, incentives for electronic payments, digital tax and so on) even the receipt lottery is not an Italian novelty. There are several countries, European and non-European, that have adopted similar measures: these include Taiwan, which has experienced this measure since 1951, China, the Czech Republic, Slovakia (since 2013), Malta (since 1997), Lithuania, Latvia (from 2019), Portugal (from 2014), Romania (from 2015).
The operating methods adopted in the various States are also different, but the founding principle is the same: to encourage consumers to request a tax receipt, giving these documents a utility (even if only psychological) for the consumers themselves, and thus increasing the compliance tax of sellers. If the receipt can serve as a lottery ticket, the consumer will have more incentive to ask the seller.In order to understand if this mechanism can also work in our country and make some sensible forecasts on the possible impacts in terms of recovery of evasion, it is necessary to start with the question of whether the lottery of the receipts have had any effect in the States in which they were introduced .

A study by the European Commission of 2015 ("Improving VAT compliance – random awards for tax compliance”) Analyzed the cases of Malta, Slovakia and Portugal. Some studies then provide important data on the experience of Romania and, above all, of Portugal, perhaps the best known case.

If we look at the experience of Slovakia, we can see that the impact of this measure in terms of tax revenue and recovery of evasion is generally quite modest. In fact, although the lottery actually has considerable popularity (about 10% of the population has registered to participate in the lottery at least once) most of the receipts that can be "drawn" come from the commerce sector, but above all from the large commercial chains, which would in any case issue tax receipts to customers.

The first analyzes on Slovakia also showed a slight increase in the revenues reported by small businesses, but this increase is not attributable only to the lottery, but to the various measures that were introduced at the same time to combat evasion.

In short, wishing to arrive at a judgment on the Slovak experience, it can be said that the lottery of the receipts had a very limited impact on the fight against evasion, and in any case less than other (more "classic") anti-evasive measures: the recovery tax revenue was modest, but there was actually some feedback in terms of population participation and attention to the problem of tax evasion.

There are other cases, at the international level, which have essentially proved to be a failure. In Argentina, for example, a lottery of receipts was introduced which initially aroused great interest and good citizen participation, but this interest quickly diminished and the measure was replaced by another type of lottery. However, even the initial interest in the new lottery declined rapidly, so these measures were abandoned.

The case of Portugal is different, and very interesting, also considering the context in which the lottery of the receipts (Fate by fate, or "lucky receipt") was introduced in 2014. In fact, in 2013 the Portuguese authorities, in order to counter the widespread tax evasion in the country, announced a radical change in the relationship with the tax payer, also by means of a measure that allowed that part of the VAT paid on certain purchases (barber and hairdressing salon services, vehicle repair, hotel services and catering) were reimbursed to the consumer himself if he had requested the receipt for the goods and services purchased.

Among the measures that the government tried to implement there was also a provision that obliged consumers to provide their tax identification number for every purchase made, but the reaction of public opinion was very negative. In fact, instead of their tax code, thousands of Portuguese citizens provided for the purchases of the prime minister or finance minister. A real fiscal protest, then.

There Fate by fate was introduced the following year in the light of these failures, and had immediately (April 2014) a significant participation by the population. Judging by the results obtained in Portugal in reducing tax evasion, it would seem that this measure has had some results in raising taxable income. However, given that the Portuguese government had simultaneously introduced numerous anti-evasion measures, it is difficult to assess how much of the evasion was recovered as a result of the receipt lottery: no study has so far provided an accurate estimate of the impact of this measure on the tax revenue.

A recent study published on theInternational Journal of Sociology and Social Policy("Please give me an invoice: VAT evasion and the Portuguese tax lottery", by Wilks, Cruz and Sousa) has also shown that the effectiveness of the lottery of the receipts and the possible side effects are not yet completely known. According to this study, conducted on almost a thousand Portuguese consumers, being able to compete for the prize draw does not seem to be one of the main reasons for requesting a receipt from the tax payer.

In fact, Portuguese consumers seem to be more inclined to request a receipt if they get some tax benefit in return (tax credit, deduction, refund of part of VAT etc.), but according to the aforementioned study, other factors must be accompanied, especially those relating to the judgment of citizens on the administration of the State: in fact, the perception of how public administration and politics manage and spend taxes collected by tax payers has a great influence, as does the degree of satisfaction with public services.

What indications can we draw from the experiences described above? We can first of all affirm that the lottery of the receipts is evidently not the main instrument of contrast to the tax evasion, considering that in the best of hypotheses the increase of the revenue that would be had for this measure is not clear, and in the worst is estimated to be rather contained .

This provision may make more sense in terms of attracting attention to the problem of evasion, promoting greater public awareness of the importance of requesting a receipt, than for the recovery of tax revenue. In this perspective, the judgment can be positive, also because of the fact that the lottery of the receipts normally have a low cost for the Treasury. This on condition, as the Argentine experience teaches us in part, to periodically innovate the operating methods to continue to make the lottery "attractive" to the population, otherwise there is a risk that the effect will be only temporary and destined to diminish considerably in time.

Furthermore, it is interesting to note that some of the main fears about the introduction of such lotteries, even understandable and common sense, seem to be largely overcome. For example, often detractors of these measures claim that they favor an increase in gambling problems, but studies related to Portugal have shown that there does not seem to be a link between the propensity for gambling and the demand for gambling. a receipt to participate in the receipt lottery. Another typical objection to receipt lotteries is that these would be counterproductive because they would send citizens the message that paying taxes is not an important civic duty but only a simple "game"; even in this case, however, there does not seem to be enough data to formulate such a conclusion.

The sore point highlighted by the aforementioned studies is actually another, especially if we consider the Italian context: the main factors that push taxpayers to adopt anti-evasive behaviors, such as requesting a receipt, are on the one hand the possibility of obtaining savings. tax, and on the other hand the perception of how the resources obtained by means of taxes and the quality of public services are spent.

Regarding the aspect of incentivising the tax payer through a tax saving, surely introducing a greater number of tax deductions for certain expenses, perhaps going to affect certain more problematic sectors in terms of "fiscal loyalty", could significantly reduce the submerged area. Moreover, the Italian experience on deductions for building renovations, for example, goes in this direction and has been very successful with tax payers over the years.

It should be noted, however, that these measures are generally quite expensive for the state, so the risks and benefits must be carefully evaluated. What can certainly be said is that, on the contrary, the proposed measures for 2020 that would reduce certain tax deductions beyond a certain income go in the opposite direction to what has just been described, and therefore risk being counterproductive and thus increasing the area of the submerged.

Regarding the second aspect, namely the perception of how taxes are spent, this seems to be the real problem that could undermine the "fiscal loyalty" and the State-tax payer relationship in Italy. It will be difficult for the Italian tax payer to be motivated to adopt behaviors that reduce the area of ​​evasion until he has the perception (sometimes right, others wrong, but still his subjective perception) that, for example, his taxes will end up to be squandered, whether the quality of public services is too low, or that the tax system treats it unjustly and discriminatively with respect to other categories of tax payers. So basically the main problem, even in this case, is the quality of public spending and the fairness of the tax system, two aspects that unfortunately seem much more difficult to reform in Italy than the simple introduction of a receipt lottery.

* Adjunct Professor of Tax Law at the University of Turin, Department of Management, and associate of CBA