Costa Rica moves forward with a new tax on lottery prizes

A subcommittee of Costa Rica's Legal Affairs of the Legislative Assembly will create a bill report to introduce a tax on lottery prizes higher than $225,000.
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A subcommittee on Legal Affairs of the Legislative Assembly of Costa Rica will be in charge of creating a report on a bill that seeks to introduce a tax on lottery prizes higher than $225,000 colones.

This initiative was created to access a $1.7bn International Monetary Fund (IMF) loan, which has a clause that sets that lottery prizes must be taxed with a 25% tax.

According to Panning Minister Pilar Garrido, the tax would allow the government to collect around 0.12% of the GDP, or about $67.4m a year.

The project, which has been criticised by different political parties, will be analysed by Carolina Hidalgo from Acción Ciudadana, Jorge Luis Fonseca from the National Liberation Party and Milady Alvarado from National Restoration.

Congresswoman Franggi Nicolás Solano previously talked about this project and said that “it’s an obsession” from the current administration and that it would “tax even the hope that Costa Ricans have in winning the lottery.”

She also stated that it could also ‘affect the finances of the Social Protection Board (JPS) and discourage the consumption of Costa Ricans as they know that the profits would be lower’.

The President of the JPS Esmeralda Britton also assured that they have the responsibility to verify and propose different alternatives to stop social contributions from being affected by these projects.

“In this sense, we are still working on different scenarios. We already have some [options] and the one that the Ministry of Finance has proposed. Then, [we will] send that information to the interested parties, starting with the legislative assembly,” she added.

Furthermore, President Carlos Alvarado said that Costa Rica is one of the few countries that don’t tax lottery winners.

“In Costa Rica, someone earns $300,000 or $800,000 or the accumulated prize and doesn’t pay taxes. It’s one of the few countries in the world where that happens.”