Costa Rican President Carlos Alvarado has suggested the introduction of a new tax on lottery prizes. At the eight dialogue table of the Executive branch, Alvarado unveiled his plan to subject lottery prizes to a 25% income tax.
The revenue collected by the new tax would help the government coffers, and it would also increase social spending, according to La Nación. Through the 25% tax, Costa Rica could generate around 0.12% of the GDP, or about $66.7m a year.
Alvarado said: “In Costa Rica, someone earns $300k or $800k or the accumulated prize and doesn’t pay taxes. It’s one of the few countries in the world where that happens. The proposal aims at taxing big lottery prizes at a 25% rate,”
However, Alvarado didn’t share what would be the minimum prize subject to the new tax.
The president added that he expects many people to argue that this could end up encouraging illegal lotteries, but he assured that the legislature has proposed a measure to fight these businesses.
He said: “[The tax] would be efficient to attack our social policy because this is what the Social Protection Board (JPS) finances, which now helps with the Fund and social programs. In our next meetings, we could [discuss this] and see where we are and how we can move forward.”
In order to access a $2.25bn loan, the government presented in September to the International Monetary Fund (IMF), which included taxing prizes higher than $380 with a 25%. However, this initiative lost support a few days after its introduction.