MA: Mideast Contest Winnings Taxation Act (Statute)

[ZuWo]

I am wary of introducing new taxes so I need to be convinced to support this bill. And if I eventually support this bill, I will only accept the tax rates in the original version of the bill. There is no way I will get behind tax rates of 45% in this case - that eats up almost the half of the prize a person wins!

[ZuWo]

Before we get too excited over these new taxes, we should try to find out how much money this will actually generate. Let's keep in mind that the beer tax amendment that we have passed recently only resulted in an additional revenue of $150 million - nowhere near as much money as we need to balance the budget.

[ZuWo]

I would assume contest winnings are currently taxed as personal income.

Does the region have a lottery?

I'll need to do some research in the wiki to find that out. Maybe someone who's been in Atlasia for a longer time knows more about that.

[ZuWo]

Is there a need for a regional lottery? And do you think the Mideast could really collect a lot of money ("a lot" means several billion dollars because that's the amount of money we need to reduce the budget deficit in a meaningful way) by establishing a lottery?

[ZuWo]

So if it is the intent of the members of this body to generate a lot of additional revenue from a regional lottery this bill has to be amended since it's mainly the sale of lottery tickets that has to be taxed.

[ZuWo]

Well, the link states that the money which the state generates by the sale of lottery tickets is an implicit tax similar to excise taxes. Thus, people who buy a lottery ticket are subject to a tax. In a bill which establishes a regional lottery we have to decide whether we want that. The question is: Should the state lottery merely be cost-covering or is it our intention to collect a lot of money by means of such an implicit excise tax?

[ZuWo]

Exactly. A portion of the ticket price is essentially a sales tax - an "implicit lottery tax". That's what I'm saying.

[ZuWo]

Well, it's not me who made the original claim that a portion of the ticket price is an "implicit lottery tax" but it's in the link. I guess the reasoning behind this assumption is that as soon as the state makes a profit with the lottery, we are dealing with a tax.

[ZuWo]

Sorry for making the mess even bigger but I would propose an amendment to the amendment. Concretely, Section 1 should be amended to read:

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This clause clarifies how the regional government can spend the revenue should we decide to establish a regional lottery. Firstly, we have to make sure that all costs of the lottery are covered (i.e. the operating costs). Secondly, the rest of the money we collect from the lottery can be used to fund certain government programs or cut the deficit.

[ZuWo]

By "primarily" I mean that the operating costs have to be covered by all means with the revenue from the lottery - this should be the primary use of the money we get. So in the unlikely case that there is very little revenue in a particular year we should at least make sure that the operating costs are covered by the money we collect from the sale of lottery tickets before we spend the money on other projects. Maybe this clause seems a bit redundant but I want to ensure that the operating costs are covered before the money is used for something else.

EDIT: I see the problem in the wording I chose. I therefore suggest to alter my amendment in the following way:

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[ZuWo]

"A part" seems better to me than a certain percentage because the costs for funding the lottery and the revenue from the lottery vary from year to year. All the bill must guarantee is that the lottery is completely funded by the revenue the lottery generates, which I think this bill does.

[ZuWo]

Now we need to figure out how much revenue we can expect from the lottery. In the best case, we can reduce the budget deficit considerably if we get this bill passed.

[ZuWo]

I agree with this amendment. The first part makes the bill more precise and the second change is a good idea as well - there should be exemptions for small winnings up tp $1000.