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Wednesday 18.07.2018 | Name days: Rozālija, Roze
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Paradnieks: grey economy can be reduced with society’s involvement

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUState institutions have to perform specific functions to secure payment of taxes in the interest of all residents. Without a doubt, every person working in state administration should promote awareness of residents on the importance of paying taxes. However, according to international practices, there are other creative tools to motivate people to participate voluntarily, explains 12th Saeima deputy Imants Paradnieks.

He says the state-organized «receipt lottery» is one such tool. It is both a positive way to create a taxpayer culture and a communication platform that helps explain why it is important to request receipts for services and goods.

«The receipt lottery is a simple idea that can bring about very good results. There are many international examples that prove this initiative’s positive effect on the state budget and residents’ desire to request receipts from service providers and traders. According to my calculations, this activity would help Latvia increase revenue from VAT by approximately 0.5% a year and increase the state budget by approximately EUR 8 million,» Paradnieks explains.

Paradnieks’ initiative about organizing a receipt lottery across Latvia was supported at the 28 August meeting of the coalition council.

The politician explains that a successful «lottery» would help the state find more money to support families and avoid shaking down other industries.

Europe’s best examples are Malta, Slovakia, Portugal and Poland. Little Malta started organizing receipt lotteries in 1997. Since 2000, the country has had a system in accordance with which several receipt owners receive prize money worth 100 times larger than the amount stated on their receipt once a month.

«We can discuss more detailed organization mechanism for the lottery later. One of the approaches to consider, however, should be Malta’s example. The owner of a receipt for EUR 10 has a chance of winning EUR 1,000. This system is still in place,» adds Paradnieks.

In Portugal, a similar lottery was organized for businesses working in sectors with high ratio of grey money: car repair, beauty and hairdressing salons, as well as accommodation and restaurant businesses. The prize there was tax discount. The second stage of the lottery also included buyers. As a result of this lottery, the number of issued receipts grew 40% and industries participating in the lottery demonstrated higher growth than the state economy as a whole.

«Portugal’s approach in offering tax discounts is a good example on how to improve the situation in sectors that are traditionally considered the grey zone,» Paradnieks explains.

The possibility of winning a prize can be used as a method for promoting habit change not just for taxes. For example, drivers in Sweden had an opportunity to participate in a lottery with prize of USD 3,000. All they had to do is comply with the speed limit. Results were ideal – the area in which the speed limit was 30 km/h experienced a decline of average speed from 32 km/h to 25 km/h. The prize money was formed from money paid in fines, Paradnieks continues.

Lithuania also plans to organize a lottery in November.

«I am certain that at least some portion of our society is tired of the constant problems caused by the enormous grey economy in our country. This is why I believe it would be a good way for residents to personally check the honesty of traders and service providers. In any case, I would like to emphasize one positive thing – only the ones who pay taxes have the chance to win,» he said.

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