The lottery receipt

Junmin Wan ()

International Review of Economics & Finance, 2021, vol. 71, issue C, 733-750

Abstract: To solicit information about transactions known only to firms and consumers, many governments have set up a lottery receipt experiment (LRE). Field studies and household surveys have shown that LREs in China have significantly improved tax declarations by asking for official receipts. We show that if the government gives a subsidy to a consumer to buy information in a competitive market, the consumer will declare the tax so that the firm cannot cheat the government. Thus, both the cheating and auditing costs can be saved and Pareto-efficient taxation without collusive evasion becomes practicable under specific conditions. A cashless payment system can also work as a lottery receipt system by curbing tax evasion.

Keywords: Lottery receipt experiment; Tax evasion; Subsidy; Tax declaration; Cashless payment system (search for similar items in EconPapers)
JEL-codes: D81 D82 H26 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:71:y:2021:i:c:p:733-750

DOI: 10.1016/j.iref.2020.09.018

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