Oddly Enough

Armenia hopes lottery will stamp out tax evasion

YEREVAN (Reuters) - Armenia is offering thousands of dollars in lottery prizes to consumers who take receipts for their purchases to try to tackle rampant tax evasion in the former Soviet republic.

The initiative began on January 1 and the first prizes will be awarded this month, after authorities said the threat of prosecution had failed to encourage shopowners and market sellers to install cash registers and provide receipts.

“It’s no secret that not many people give receipts in Armenia,” said Armen Alaverdyan, deputy head of the state revenue committee.

Authorities estimate the grey economy accounts for 30-40 percent of economic activity in Armenia, a landlocked country of 3.2 million people, in transition since the collapse of the Soviet Union.

Street sellers are everywhere and markets rarely have cash registers.

Under the new scheme, if customers buy from a trader with a cash register, they stand to win between 5,000 drams (11 pounds) and 500,000 drams. One lucky winner, if the eight-digit number on their receipt matches that drawn in the monthly lottery, will win 5 million drams ($16,000).

The monthly prize fund amounts to a maximum of $380,000. The government hopes the lottery will bring in an extra $17 million per year in tax receipts.

But not everyone is smiling.

“The market sellers don’t want to install cash registers because they want to avoid paying taxes,” said Vahan Kerobyan, chief executive officer of Star supermarkets.

One market trader in Yerevan, who asked not to be named, said: “We always pay taxes. If we install cash registers, the amount of tax will increase, and we’ll need to hire accountants, which will cost even more.”

Writing by Matt Robinson; Editing by Janet Lawrence