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The lottery receipt

Author

Listed:
  • Wan, Junmin
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.

Suggested Citation

  • Wan, Junmin, 2021. "The lottery receipt," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 733-750.
    • Handle: RePEc:eee:reveco:v:71:y:2021:i:c:p:733-750
    DOI: 10.1016/j.iref.2020.09.018
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    References listed on IDEAS

    as
    1. Junmin Wan, 2010. "The Incentive to Declare Taxes and Tax Revenue: The Lottery Receipt Experiment in China," Review of Development Economics, Wiley Blackwell, vol. 14(3), pages 611-624, August.
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    More about this item

    Keywords

    Lottery receipt experiment; Tax evasion; Subsidy; Tax declaration; Cashless payment system;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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