Taiwan's Govt Increases Tax Collection by 75% with the Uniform Invoice Lottery Scheme
Find out how Taiwan's Govt increased its tax collection by 75% in a single year without any crackdown, tax rate hikes, or one time levy. They launched the Uniform Invoice Lottery scheme to gamify tax collection, with winning invoice holders getting prizes of cash receipts.
Rahul Mathur
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How did Taiwan's Govt increase its tax collection by 75% in a single year?
— Rahul Mathur (@Rahul_J_Mathur) March 21, 2023
No crackdown. No tax rate hikes. No one time levy. So, you're wondering how? They launched the "Uniform Invoice Lottery" scheme to gamify tax collection: -
1. In Taiwan, all invoices (from grocery to Gucci) follow the Govt standard format with a unique 8 digit code to identify the invoice
— Rahul Mathur (@Rahul_J_Mathur) March 21, 2023
2. In 1950-51, the Taiwan Govt rolled out a simple lottery:
- Every alternate month (i.e. 6 times yearly), on the 25th, they would run a lottery -
- The winning invoice holders would get prizes (cash receipts) of $63,000 ; $6300 and a few smaller ones
— Rahul Mathur (@Rahul_J_Mathur) March 21, 2023
Yes, that's the Govt running a lottery😂
- In 2011, due to inflation, the Govt hiked the winning prize to ~ $350,000 -
3. Why did / does this work?
— Rahul Mathur (@Rahul_J_Mathur) March 21, 2023
- Reduces tax avoidance: Every shopper & store owner wants to issue the Govt invoice for a chance to win the lottery (this uncertain pay-off drives everyone into a frenzy) -
- Play on psychology: Similar behavior in gambling where national lottery tickets are purchased in millions; but in Taiwan, you get a ticket for purchasing items legally
— Rahul Mathur (@Rahul_J_Mathur) March 21, 2023
- Numbers are proof: Launch year of '51, tax collection rose to $1.6M versus $900K in '50 (75% increase) -
Another fact: Due to the standard invoice, a biz in Taiwan doesn't need extensive accounting help - Govt & biz knows exactly what taxes are due.
— Rahul Mathur (@Rahul_J_Mathur) March 21, 2023
This is one unique story I came across while reading the book "Actionable Gamification" by Yu-Kai Chou. Great read - highly recommend!