Get Receipts, Win a Car: How Greece’s VAT Lottery Plan Worked in Portugal

By  PATRICIA KOWSMANN

The Wall Street Journal

Greece has been mocked for coming up with unusual measures to tackle tax evasion, from hiring students and tourists as undercover inspectors to offering lottery prizes tied to sales-tax receipts.

To know if at least one of these measures work, take a look at Portugal.

Since April last year, the Portuguese government has been running a raffle for people who demand receipts for the goods and services they buy, thereby forcing those businesses to pay value-added taxes. The result? More than 40 lucky Portuguese are now in the possession of a brand new Audi. And revenue from VAT has risen more than 4%, or €563 million ($611 million), while private consumption rose just 2%.

Just as Greece and other Southern European countries, Portugal struggles with tax evasion. The so-called shadow economy accounts for about 19% of its gross domestic product. Also like Greece, Portugal got a bailout from the European Union and the International Monetary Fund after markets lost confidence in its ability to pay its debts in 2011. (It exited its €78 billion rescue program last May.)

To boost government revenues, the government in Lisbon has imposed dozens of measures to fight tax evasion. They’ve offered income-tax discounts to citizens who file many VAT receipts and, since April, have run a lottery with receipts submitted to the government.

Government officials say that since the lottery was launched, the number of eligible receipts has risen by 26% to 43 million. And Portugal, with a population of over 10 million, has awarded more than 40 Audi A4s and A6s.

Why did Portugal choose to award German cars? Because the manufacturer offered the best deal among bidders, the government says. It remains to be seen whether the government in Athens, which has had more than its fair share of run-ins with Germany, will be offered the same chance.