Work detail

The VAT lottery as a charitable lottery

Author: Bc. Veronika Horváthová
Year: 2015 - summer
Leaders: doc. PhDr. Martin Gregor Ph.D.
Consultants:
Work type: Bachelors
Language: English
Pages: 62
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/140221/
Abstract: This thesis consists of two main parts. At first, VAT lotteries are modelled as
charitable lotteries for a public good. For that purpose, an economy consisting
of risk-neutral, utility maximizing consumers with quasi-linear preferences is
assumed. It is shown that the Taiwanese and the Slovakian versions of the
VAT lottery provide more of the public good than an economy with no such
lottery. The second part analyzes the willingness of firms and consumers to
cheat and keep part of the VAT revenue for themselves. This is done because
the key difference between the VAT and the charitable lotteries is the existence
of firms which have an incentive to cheat and collude with the customers at
the expense of the tax office. So when a set of profit maximizing firms is added
to the model and the presence of the VAT lottery is still assumed, it is shown
that under certain circumstances it might be more profitable for firms and
customers to cheat because higher levels of profit or utility, respectively, might
be achieved.

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