Friday, August 14, 2009

What price lottery fever?

When a lottery jackpot in Canada hits $20 million or more, it's a big deal. Multi-state lotteries in the States often give away ten times that or more (taxable of course and those who take lump sum payouts often receive only a third of the stated amount).
But in some parts of Europe, lottery fever has reached the point of insanity. Take Italy, where people are flying in from across the EU just to play that country's largest national game. With staggering odds of 622 million to 1 and no one having won since January (including last night), plus an unlimited rollover, Saturday's jackpot in Italy is going to get to at least €138.9 million, or USD 198.4 million. Tax-free.

Lotteries and casinos do raise much needed revenues for governments, even in the worst of times (they seem to be rather recession-proof). Unfortunately, they also play on the most vulnerable elements of society as well as the purely vain who just want to get richer and richer. In the present case, obviously you can't stop freedom of travel in Western and Central Europe nor should anyone want to; but at what price? Plus, isn't one just cheating their own government by paying a voluntary tax to another?
Often, a "use tax" is imposed on people who try to evade sales taxes by going to another jurisdiction and shipping the goods back which is why most of Europe also has a treaty on VAT to make sure the tax ultimately goes to the correct country (paid by the consumer, naturally). Shouldn't the same apply to lottery tickets?
A similar principle should, I think, apply to Canadians winning money in the States. Lottery winnings are tax free and Canadians technically could get their money back (eventually), but in a way we're greasing the palms of our neighbours so it would be easier just to impose a tax when the tourists come back -- I would suggest something equal to the GST or the harmonized sales tax in an increasing number of provinces. That would encourage Canadians to play their money in Canada where the money goes directly to the provinces and territories in the first place.

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1 comment:

Anonymous said...

It wouldn't encourage bringing your money back to Canada. It would encourage taking your money somewhere that doesn't tax it yet again. I think having a fat bank account in the Caymen Islands or such would be pretty attractive to a Canadian.

Leaving the money untaxed doesn't mean Canadians wont benefit. Winners buy cars (GST), homes, (property taxes), they go back to school or start small businesses. Or they pay off some bills, that probably have some taxes attached.