On a recent trip to Myanmar, I was surprised to find that all of my dining receipts came with government stickers on them. It turns out that these stickers are a solution to a tax fraud problem. Restaurants are supposed to charge sales tax, but the government has limited capacity to ensure that the tax collected from patrons actually reaches the government. So the government sells stickers to restaurants that say the price the restaurant paid, and restaurants post these stickers on each receipt for the amount of the tax. Compliance is secured through a combination of direct enforcement and public pressure. This low-cost, low-tech solution ensures the flow of money to the government instead of the pockets of unscrupulous business owners.
The same innovation could be applied to combat petty corruption, helping to ensure that the money from various charges paid by citizens—from license fees to road tolls to other government service charges—flows to official coffers rather than bureaucrats’ pockets. In any situation where an individual has to pay the government – from garbage collection to healthcare to speeding tickets – demanding a stickered receipt could ensure that the government agent doesn’t pocket some (or all) of the payment. Moreover, using these stickers would have a more subtle secondary benefit: fixing the price of government services. Consider a citizen who applies for a driver’s license and has to pay a cash fee. The bureaucrat in charge of processing the application not only has an incentive to not only pocket the cash, but also to exaggerate the size of the license fee in order to have more to steal. The stickers help ameliorate this problem, because a citizen who demands proof of payment in the form of stickers diminishes the incentives of the bureaucrat to inflate the price.
Of course, while the sticker system helps address petty embezzlement, it does not (directly) address the problem of petty bribery. A bureaucrat could demand an additional bribe on top of the official price for a service. Or a government agent could offer to not impose some charge or fine in exchange for a bribe paid directly to the official. The classic example here would be a police officer offering to look the other way on a traffic offense in exchange for a payment. Nonetheless, the sticker system may also help to curb these sorts of petty bribery, for a few reasons:
- First, as Heesu argued in a recent post, at least some forms of petty bribery—those driven by lack of adequate funding for government programs—can be curtailed through the imposition of official user fees, the proceeds of which can fund the government programs. However, as she points out, this system falls apart if user fees can be pocketed by government officials. Heesu’s proposed solution—electronic cash registers—may be unrealistic in a country like Myanmar, where blackouts are common and infrastructure often decrepit. A sticker system accomplishes a similar goal without the technological requirements.
- Second, even when a dishonest public official demands a bribe on top of the official fee, the sticker program makes the situation more transparent and increases the citizen’s bargaining power, because at least the citizen knows the true price of the service.
- Third, in those situations where some government agents are not assessing charges that they should (like speeding ticket fines), and instead taking bribes from the citizens who should be paying the official assessments, at least the sticker system provides a straightforward way for a government to find ineffective and dishonest bureaucrats: they are the ones not using the stickers. Indeed, in extreme cases the government might consider compelling bureaucrats to purchase some minimum amount of the stickers, creating a minimum amount of revenue for the government without giving the bureaucrats incentives to over-enforce.
Despite its benefits, low costs, and minimal technological requirements, the sticker system does face some potential difficulties. The most significant is ensuring compliance. Citizen monitoring is key to the program’s success, but such monitoring might be limited if there is no incentive for citizens to complain about or report a missing sticker. But there are ways to create those incentives, for example by enacting a rule that says to citizens, “If you don’t receive a sticker, your service is free.”
In the efforts to address corruption in developing countries, high-tech solutions are often given a lot of attention, due to both the power of technology to solve complex problems and perhaps the novelty of using a high-tech solution. (I’m looking at you, blockchain enthusiasts!) But the on-the-ground reality in the developing world often means that complicated systems are plagued by underutilization and misunderstanding. Stickers are a refreshingly simple, no-tech solution to a complicated set of problems faced by developing governments, and may provide sustainable, maintainable, easy-to-use systems for combating petty corruption.