Brazilian Lawmakers Concerned about High Taxes on Sports Betting
In Brazil, the country has been debating how to introduce regulated sports betting for quite some time. The plan was initially to tax operators at a 5% rate on their gross gaming revenue, which was later increased to 16%. However, when the final regulations were approved, many were left shocked by the sudden increase to 18% in tax rates. Some lawmakers are not happy about this.
Recently, on July 24th, a provisional measure to regulate sports betting in Brazil was finally approved. If it gets the green light from Congress, it would permanently change the federal gambling framework in the country.
Fernando Haddad, the Minister of Finance, is the main proponent of the provisional measure. He argued that the high tax rate would "create investment opportunities" for the country. But, this seems to contradict the many amendments that have been presented since its approval.
Since President Inacio Lula da Silva signed the betting bill, over 240 amendments have been submitted to Congress. Some were created by lawmakers, while others were created in response to industry trade group backlash.
These amendments aren't just about tax rates. In fact, there are calls for stricter advertising controls, tighter restrictions on unlicensed operators already in the market, and more. However, the main topic of debate has been the tax rate, and its potential impact on the regulated market.
Many believe the 18% rate is too harsh, and adds on top of local and Social Security taxes, sending the effective tax rate up to 30%.
Deputy João Bacelar thinks the rate should be reduced to 15%. He argues that anything higher could result in the unregulated market growing, which would undo any possible benefits the government is hoping to reap from the high tax rate.
Congressman Newton Cardoso has introduced an amendment that would reduce the rate to 11%. He disagrees with the government's claims that it modeled the rate after the UK gaming market, calling the idea "farcical" since the rate there is actually 15%.
The Brazilian Institute of Responsible Gaming (IBJR) has adamantly opposed the tax rate. It views the rate as a hindrance to the expansion of regulated gaming and innovation. The trade group seeks transparency from the government on how it determined the rate and why it believes a high rate is necessary for an industry just starting out.
The IBJR also notes that the Brazilian tax rate is significantly higher than the UK's tax system, and that the license cost is five times higher than what it would be in the UK.
IBJR president, Andre Gelfi, believes that Brazil might be digging itself into a hole with the tax rate. He stated, "The Brazilian tax burden will be at least 350% higher than the English one in the way presented."
With 120 days for discussion on the provisional measure, Brazil's lawmakers might be able to find a solution to lessen the impact of the betting regulations on the industry.
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Source: www.casino.org
