Comments on: Armenia hopes lottery will stamp out tax evasion

By: Global Voices Online » Armenia: Tax Lottery

Global Voices Online » Armenia: Tax Lottery — Sun, 08 Feb 2009 13:14:50 +0000

[...] course, as The Armenian Observer comments, the initiative is likely to be most successful with women. While the resistence is high among [...]

By: barev

barev — Sun, 08 Feb 2009 01:30:33 +0000

My girlfriend’s sister won 5000 AMD. They were more excited about the fact that the lottery was actually for real than for the money itself.

By: V

Sat, 07 Feb 2009 10:00:34 +0000

Tell them not to get disappointed. At least, they did not spend any money buying lottery tickets.

By: Observer

Observer — Sat, 07 Feb 2009 06:56:26 +0000

Well – my wife and Mom were rather disappointed I must say :) they had checked 20 or so receipts and got really close to winning 5,000 AMD, missing one digit.

By: V

Sat, 07 Feb 2009 06:00:11 +0000

According to some news reports I heard on TV, some supermarkets reported a 7-fold increase in January sales, compared to January 2008. This is obviously due to the winning receipts, since they were under-reporting last year, whereas now they are forced to give out receipts and report real numbers.

By: nazarian

nazarian — Fri, 06 Feb 2009 19:27:45 +0000

Good to know. This will hopefully start generating some sense of civic belonging among the people. I hope the government doesn’t screw up and start saving money on the lottery.

By: Observer

Observer — Fri, 06 Feb 2009 18:08:06 +0000

Yeah, V, thanx for mentioning that. Indeed – there is an incentive to make sure you have the right amount.

Anyway – the lottery is over now. Has anyone won anytbing? Would be great to know!

By: V

Fri, 06 Feb 2009 15:23:58 +0000

Btw, I have personally collected about 110 receipts in January and none of them have the wrong amount on them, and I have never had to ask to make sure I get the right amount printed on them.

By: V

Fri, 06 Feb 2009 15:20:32 +0000

Actually, the amount on the receipt matters. You get bonuses for each 1,000 AMD on the winning receipt. So, there is an incentive to demand that the right amount be written on the receipt.

Will there be fraud? Undoubtedly. Tax evasion has existed ever since taxes were created. However, I still say it is a good idea and it will work. Even if not 100% of the customers get 100% of the receipts, the number of receipts given out has already increased many fold and will continue to increase.

By: nazarian

nazarian — Fri, 06 Feb 2009 13:35:20 +0000

Incentivising the behavior on the consumer side is a good way to achieve results. Ideas like ‘civic duty’, ‘thinking about the future’, etc. sound good on TV but in real life people need incentives or disincentives to modify their behavior. So, a lottery is a great way to incentivise the behavior of the consumer. Everybody loves free things with no strings attached.

So, the consumers will control the handing out of the receipts from now on. But how will the retailers cope? Will they stop evading taxes?

The answer is ‘maybe’. Since the consumer is incentivised to demand a receipt with a receipt number on it, s/he will receive it. But from what I see, the amount written on the receipt is irrelevant to the consumer, i.e. there is no incentive, or disincentive, to have the correct amount. The retailers will start handing out receipts that show a lower purchase price (hence lower revenues and lower taxable income on their books). They will commit fraud, and the consumers will commit fraud by taking part in the lottery with fraudulent receipts.

The whole population will thus become fraudsters if there is no control over the amount written on the receipt.

By: V

Fri, 06 Feb 2009 12:03:32 +0000

Even if the prize money will go to only certain individuals, people are still going to ask for receipts, which is exactly the aim of the whole thing. Plus, if a receipt holder doesn’t win anything, he/she will not have lost anything either, since he/she did not spend any money on buying a lottery ticket. In other words, it’s a win/win situation for everyone.