So I guess I'm curious about how Italy's system works then? It's an empirical question, how much money would I have to be offered to turn on a system of convenience and perhaps monetary discounts? (I'm not considering the downside of off the book transactions as a consumer, I realize).

I'm assuming for it to work in Italy, you would have to make the reward for reporting non-compliance higher than any discount a business owner could offer.

It would presumably need to be several orders of magnitude higher as I would probably buy more donuts than I would submit non-compliance reports. And let's not forget it's the government that's running this - they don't necessarily need to turn a huge (or any) profit to make this work in the long term.

  Donut with receipt:    $  1.49
  Donut without receipt: $  1.00

  Taxable reward from
  gov't for reporting
  non-compliance:        $500.00

The government would also have to worry very little about profit because the fine for not giving customers receipts could be higher than the reward for reporting non-compliance, which makes the system self-funding.