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The Georgian Tax Lottery of 2012. A Multi-Methodological Assessment

Lotta Larsen (), Rubina Arakelyan (), Teimuraz Gogsadze (), Mariam Katsadze (), Sophiko Skhirtladze and Nino Muench ()
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Lotta Larsen: TARC (Tax Administration Research Centre) at University of Exeter Business School
Rubina Arakelyan: ISET - International School of Economics at Tbilisi State University
Teimuraz Gogsadze: ISET - International School of Economics at Tbilisi State University
Mariam Katsadze: ISET - International School of Economics at Tbilisi State University

Working Papers from International School of Economics at TSU, Tbilisi, Republic of Georgia

Abstract: Tax lotteries are seen as ways to relatively easily augment public revenue while also increasing compliance. Tax lotteries are constructed so that consumers are nudged to ask for a receipt when making a purchase. This receipt contains information so that it can also be used as a lottery ticket with the possibility of winning prizes. Such tickets also leave traces of transaction records so that revenue authorities can audit vendors. Given this background, the aim of this paper is to provide a broad, multi-methodological and socio-economic assessment of Georgia’s tax lottery experience in 2012. Our assessment aims to describe the design of the lottery and its functioning in practice, to evaluate how the introduction of the tax lottery influenced the effectiveness of tax administration in Georgia at the country, regional, and firm level and to investigate Georgian citizens’ views of the Georgian Revenue Service (GRS) and if tax compliance was improved by the tax lottery. Economic assessment, based on data from 2012 and 2013 on weekly transactions per cash register, using three econometric specifications show that during the lottery weeks, there is a significant increase in the aggregate weekly sales compared to the non-lottery weeks. The number of cash registers reporting their income and the average weekly sales are also higher in lottery weeks. Thus, there are proper foundations to argue that the lottery propelled the increase in reported income. But this tax lottery also aimed to popularize the cash registers as well as to improve citizens’ attitude towards the GRS. Following our qualitative investigation and assessment into the Georgian Tax Lottery we would like to add the following points. GRS achieved its purpose, at least in the short term. More revenue was collected and vendors became very conscious and aware of printing and giving receipts to customers. However, what the impact became in the long run, is harder to say. Strategies of “love and fear” are difficult to make work in combination, and we find it hard to say that citizens’ views of the GRS improved. Perhaps even the contrary could be proposed.

Keywords: Tax Lottery; Tax Evasion; Interdisciplinary Tax Study (search for similar items in EconPapers)
Pages: 67 pages
Date: 2019
New Economics Papers: this item is included in nep-acc, nep-cis, nep-iue and nep-pub
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