A Low-Cost, No-Tech Solution to Petty Corruption: Stickers

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.

6 thoughts on “A Low-Cost, No-Tech Solution to Petty Corruption: Stickers

  1. Fascinating post, Jetson. Stickers seem to be a clever way of frontloading taxes so officials can’t get around them at the point of sale. As far as potential challenges, I had the same instinct as you: the primary obstacle to a sticker-based anticorruption scheme would likely be consumer participation. But another obstacle that comes to my mind is counterfeiting. Do you see that as a serious concern? Are the stickers worth enough to make that cost-effective? Can the government cheaply incorporate anticounterfeiting mechanisms into something so small and cheap?

    • Thanks Jetson- it’s heartening to read about such a refreshingly simple scheme. Echoing Jason’s thoughts- how easy would it be to have counterfeit stickers, and would citizens really be able to tell the difference? Moreover, if the restaurant is saving x% by hiding the transaction from the government, couldn’t the restaurant just give the consumer a discount smaller than X% to avoid giving a sticker?
      I’m also curious how this scheme practically works- it wasn’t quite clear to me. What happens if a restaurant for instance underestimates the stickers they need? Are they not going to be able to serve people till they get more?

      • Jetson, thanks for sharing. The sticker scheme you describe (though, like Disha, I’m still not completely clear on the mechanics) reminds me of what I think may have been a similar program I encountered when I was living in China. I don’t know if this system is still in place, but while I was in China, at certain restaurants, if you paid the sales tax you’d get an official receipt with a scratch-off lottery ticket on it. The scratch-off scheme incentivized consumers to pay the tax and to ask the restaurant for an official receipt, which in turn made it more difficult for restaurant owners to engage in any financial chicanery. I don’t know how effective the scheme was overall, but I do know that I loved scratching off my receipts to see if I’d won anything, so I suspect it did make an impact.

  2. Very interesting post Jetson. Like others, my first question upon reading this was how easy it would be to print your own stickers to use, or buy some on the black market. Perhaps the stickers have some sort of feature that makes them very difficult to counterfeit (like US dollar bills)? It seems like that might get expensive to produce though.

  3. Thank you, Jetson. In addition to sharing the concerns with fake stickers and wether dealing with this problem would demand more tech to be involved (to make it more difficult to counterfeit stickers) and defeating the simpleness of the program. It would also be illuminating to hear more about whether the use of stickers had a real effect on increasing bribery while decreasing embezzlement. If there is a great imbalance between citizens and officials, I wonder whether despite having more information now, citizens still feel constrained to pay bribes.

  4. We finally have receipts lottery in Lithuania too! It works super easily – consumers can register their receipts online using the number listed on the fiscal receipt and win money. Thus, they are encouraged to request a receipt. Once the fiscal receipt is printed, the sales amount is accounted for and the taxes start kicking in. (The problem it is trying to solve is that in some cases the service provider would only issue a non-fiscal receipt – and thus evade taxes)

    Somewhat like others, I was not fully sure I understood how this works in your example. Out of curiosity – does each sticker have a tracking number, thus marking the receipt as an “official”? But how does the state know how many stickers are used and should be accounted for? Do they rely on the service providers?

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