Representatives from Costa Rica have rejected the tax on lottery prizes proposed by President Carlos Alvarado. His plan wanted to subject lottery prizes to a 25% income tax to help government coffers.

According to CRHoy, Congressman Erick Rodríguez said the proposed lottery tax is a “populist tax” adding “it doesn’t solve any fiscal problem” that the country may have. On the other hand, the President believes that through the 25% tax, Costa Rica could generate around 0.12% of the GDP, or about $66.7m a year.

Rodríguez stated: “It doesn’t solve anything, it will aggravate the Social Protection Board (JPS) situation, and also [affect] the people who play lottery and chances. When they’re told that they have to give up 25% of what they win, illegal gambling will increase.”

In addition, Deputy Pablo Heriberto Abarca criticised the President’s initiative and said: “We talked about this issue when we discussed the Fiscal Plan, but after its approval, we’re going to talk about the reform from the State and [how] we can decrease spending. We’re not going to vote anything regarding new taxes.”

Alvarado’s proposal, which was introduced at the eight dialogue table of the Executive branch, aims to improve government revenues and increase social spending in Costa Rica.

“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,” Alvarado said.