How did the Taiwan Govt increase its tax collection by 75% in a single year from 1949-50 to 1950-51

They did no crackdown. No tax rate hikes. No one time levy. No amnesty scheme. Nothing of the sort.

So, now you’re wondering how?

They launched the “Invoice Lottery” scheme & gamified tax collection.

In Taiwan, all invoices (from buying an apple at a grocery store to buying Mac products in Apple stores) follow the Govt standard format with a unique 8 digit code to identify the invoice. Based on that, in 1950-51, the Taiwan Govt rolled out a simple lottery in which the invoice number of the invoice you got in Taiwan for purchasing items legally, became your lottery ticket.

And these were the simple Lottery Rules:

• Every alternate month (i.e. 6 times yearly), on the 25th, they would run a lottery.
• Both the winning invoice holders and the stores who issued the invoices in those 2 months, would get cash prizes starting at $63,000 for all numbers matching, reducing down to $63 based on how many numbers of your invoice matched those of the lottery winning numbers – just like it happens with a normal lottery ticket.

And by god did it work!!! And how!!!

In just the launch year of 1951, tax collection rose to $1.6M versus $900K in 1950 (a 75% increase).

So, why did this work?:

• Coz the scheme provided for big gains for a small cost: Every shopper & store owner now wanted an official invoice issued, for a chance to win the lottery as the cost was seemingly low for each transaction (just the VAT amount), but potential pay-off was high. This big pay-off drove everyone into legal tax-paid shopping.
• Habit-forming across generations: Once society had got into a habit of operating within the legal guardrails across generations, they accepted that as fait accompli.

And that’s how Taiwan gamified tax-paying to gain a massive upside for them, with no blowback or bitching from the public.

This is not simply a history lesson. The famed Taiwan tax lottery still runs to date (at present the winning prize is approx $400,000 (at last check). Taiwan has one of the lowest tax avoidance ratios in the world.

This is from the book “Actionable Gamification” by Yu-Kai Chou.
A great read – highly recommended…