Digtal Revenue Protection from De La Rue Verify - A new track and trace system could be the smart solution for embattled economies


In these troubled times, who’d be a finance minister? In developed economies, bailing out stricken banks has opened a massive black hole at the heart of government finance. Nor have less advanced economies escaped fiscal misery. They may not have hedge funds and sub-prime lending to contend with, but they too are struggling with the effects of global economic recession and declining tax revenues.

Sadly, there are few easy solutions. Increasing direct tax rates is politically contentious, deflationary and encourages tax evasion. Cutting public services is unpopular in practice, even among people who support a smaller public sector in theory.

Raising indirect taxation, on the other hand – typically on products like tobacco and alcohol – is a tried-and-tested way of bringing in revenue. But it acts as a powerful incentive to illicit trade, so may be counter-productive in the long run.

Could a neat solution be lurking beneath the political radar? Better enforcement of existing government taxes on tobacco and alcohol is a political no-brainer, with the potential to bring in seriously useful amounts of tax revenue currently lost through counterfeiting activity and illicit trade. In one oft-quoted statistic, the amount lost through tobacco tax fraud by the US State of Washington alone is estimated to be around $200 million a year.

Tax stamps (also known as fiscal stamps or banderols) – secure stamps applied to each item, incorporating anti-counterfeiting features and sometimes a unique identifying number – have a proven capacity to boost revenue; their recent introduction in an Eastern European country increased the tax take from sales of alcoholic drinks by 1300 per cent. Indonesia is said to have achieved a five-fold increase in tax revenue following the introduction of a secure tax stamp. But tax stamps are not a complete answer; like any item of inherent value, they too attract the efforts of counterfeiters, and counterfeiting and diversion activities tend to escalate when times are hard.

A new product from De La Rue Security Print – launched in April 2009, at the peak of the global financial crisis – takes the fiscal stamp option to the next level. De La Rue has teamed up with the US-based Verify Brand to produce De La Rue Verify™, a high-tech, digitally-enabled Digital Authentication, Track and Trace® system to work with its highly secure tax stamps.

A powerful tool designed to help national governments boost the effectiveness of their tax collection systems, De La Rue Verify provides a secure digital code that allows enforcement authorities instantly to answer two questions: is this product genuine? Is it where it should be?

The ability to offer immediate, 100 per cent reliable authentication irrespective of the size of shipment is hugely valuable to customs and revenue authorities (see the interview with Doug Tweddle, Exchange 15), enabling more targeted, “intelligent” enforcement. The real-time intelligence produced by a digital track and trace system supports a range of World Customs Organisation objectives, from international harmonisation to trade facilitation and supply chain security.

But De La Rue Verify’s capabilities stretch even further. It is also a powerful generator of business intelligence. This can be used not only to identify illicit trade points but also to drive wider business objectives – for example, improve forward and reverse logistics, forecast and increase revenue and identify possible efficiency savings.

Available as a stand-alone service, De La Rue Verify also can be easily integrated with existing technologies, partners and systems. The system is compatible with many different identification technologies including human readable identification, bar codes, RFID (Radio Frequency Identification) and proprietary designs. A new system could be up and running in as little as 90 days, from an initial needs analysis to full implementation.

Flexible, simple and quick to implement, De La Rue Verify has possible applications right across the economy, from pharmaceuticals (where counterfeiting can be a matter of life or death) to software and the media. But in straightened times, it is the capacity to boost tax revenue that has really caught people’s attention. Taking tax enforcement into the digital age, De La Rue Verify looks uncannily like that rare thing, a policy option with no significant downside. Better tax enforcement is a win-win scenario for everyone except the counterfeiters.

> For more information about De La Rue Verify™ contact Paul Miller at paul.miller@uk.delarue.com
> De La Rue Verify™ is a trademark of De La Rue International Limited. Digital Authentication, Track and Trace® is a registered trademark of Verify Brand LLC (www.verifybrand.com)