Portugal’s “Lucky Invoice” lottery dangles carrot for tax dodgers

With the country still locked in a painful austerity drive to cut the public deficit, the Portuguese government has come up with a plan to reduce black-market activity – which is estimated to amount to 25 percent of GDP – and swell the state’s coffers.

As of April, the state will hold weekly lotteries to encourage consumers to ask for official receipts or invoices for all goods and services they have paid for. The plan will apply to all sectors of the economy and all types of businesses. The bills can be for any amount, but they must include the purchaser’s personal tax identification number. Consumers will be given coupons for every kosher receipt they receive, including for utility bills. The amount of coupons for each transaction will depend on the size of the bill. For example, a consumer who pays a restaurant bill that amounts to 80 euros will be entitled to eight coupons, all of which will go into a weekly draw, with prizes such as new cars or cash likely to be up for grabs.

With the standard value-added tax rate raised to a hefty 23 percent as part of the austerity drive, businesses and individuals have a clear incentive to pay for things under the table. The government is now hoping to take in between 600 and 800 million euros a year by rewarding those who follow the path of fiscal righteousness.

The measure was approved Thursday by the government. The secretary of state for fiscal affairs, Paulo Núncio, was due later Thursday to give details of the lottery, which is to be known as the Factura da Sorte (Lucky Invoice).

The lottery will “reward the civic fiscal behavior of taxpayers in the fight against the underground economy, the prevention of tax evasion and unfair competition in a manner that pursues a more equitable tax system,” the government said in a statement.

The government will set up a website that will allow consumers to consult the receipts for bills they have paid that have been duly registered by businesses. Individuals will also be able to find out which of the coupons they have received are eligible for forthcoming draws by email or SMS message.

Companies will not be eligible for the draw, while freelance workers can only participate in the lottery through purchases they have made outside their line of business.