The report from the Ministry of Finance the government in Latvia reviewed on Tuesday, 15 November, proposes ending the so-called receipt lottery in the country, making the lottery that will take place in February 2023 the last one. The Cabinet of Ministers supported this proposal.
The Cabinet of Ministers has ordered the Ministry of Finance to prepare a legislative draft to declare the receipt lottery as null and void. The ministry is also ordered to start working on the draft of the State Budget for 2023, as well as accompanying legislative drafts.
The report mentions that the efficacy of the lottery was analysed every year since its start. After looking at the pros and cons of the lottery, as well as based on evaluation of efficacy criteria and use of state budget, Ministry of Finance concluded that the receipt lottery in its initial launch was an effective tool used by the State Revenue Service (VID) to battle grey economy that had a positive effect on state budget revenue.
According to results of the survey performed by SKDS in 2020,
an average of 21% of respondents admit that after the start of the receipt lottery they have started paying more attention to whether stores issue receipts after purchase.
Experience of multiple countries that regularly organise receipt lotteries indicates that it is a very good short-term (approximately two years) tool to help limit grey economy and an effective social campaign. However, as the interest from residents goes down, it would not be worthwhile to continue this campaign, because the costs would outweigh the benefits, as mentioned in the ministry’s report.
The efficacy of the lottery directly depends on residents’ participation in it. The current indexes and outlooks indicate the need to review this option, the ministry explains. Both the number of participants and the number of submitted receipts has gradually and consequently gone down throughout the entire time the lottery has been active.
Epidemiological restrictions, their adoption or cancellation, novelties in the receipt lottery (thematic quarters or letting residents submit bills) or promotional campaigns have not changed the general dynamic. Currently it is expected that the criteria of the 2022 receipt lottery related to the number of participants and submitted receipts will not reach sufficient levels, the ministry outlined in its report.
The latest data for the lottery in 2022 indicate that the average number of participants will not reach the average level (43 315 participants) and the average number of submitted receipts (830 545) will not be reached either.
Additionally, the number of receipts submitted in thematic quarters of the first half-year of 2022 has increased by only 1%, whereas the planned increase in this areas was 7%.
All this indicates to the ministry that the third criterion will not be completed either.
The ministry’s report mentions: as the number of participants of the receipt lottery and the number of payment documents submitted continue going down, it will be difficult to reach the efficiency criterion that state the proceeds from the implementation of the receipt lottery must be twice the expenditures necessary for the organisation of the receipt lottery in 2023. Additionally, it is necessary to keep in mind that additional revenue would be necessary to continue the lottery across 2023.
Considering that the three criteria were not reached in the first half-year of 2022, it is unlikely they will be accomplished in 2023 either. This is why, to prevent the lottery from having a negative impact on the state budget, the Ministry of Finance proposes ending the lottery.
Ministry of Finance notes that the State Revenue Service’s programme Provision of state revenue and customs policy was provided funding of EUR 635 012 to cover the costs of the lottery and the prize pool.
According to information regarding results of the lottery for the last one and a half years, during preventive measures and thematic reviews entrepreneurs submitted clarified declarations and declared additional taxes, increasing state budget revenue (directly) by EUR 2.03 million in 2020 and EUR 1.73 million in 2021.
Generally the Ministry of Finance concluded that the lottery benefits both winners and society in general, as it promotes registration of taxed transactions, ensures transparency and rewards honest competition. VID uses information received from the lottery primarily for preventive measures.