At current levels, the tax would deliver more than R10bn to national government – but ‘the main objective is discourage problem gambling’. Picture: AdobeStock The potential introduction of a 20% national tax on the gross gambling revenue of all forms of online gambling may very well violate the Constitution. Commentators are also of the view that it undermines democratic practice due to the lack of meaningful consultation with those who will be affected.
The Free Market Foundation calls the proposal “a naked revenue grab that threatens the very existence of the legal gambling market”. Revenue from legal gambling is widely regarded as a far safer alternative than the technically illegal, unregulated activity of interactive gambling. Ayanda Zulu, political studies graduate from the University of Pretoria and an intern at the Free Market Foundation, says in a published article the “bizarre proposal” should not see the light of day.
In terms of the National Gambling Act, gambling regulation is effectively a provincial competence. While the national government plays a role in oversight and coordination, the provinces retain primary authority over regulatory responsibilities. “This means that a national tax is unconstitutional because its centralisation of fiscal responsibility ignores clear jurisdictional boundaries and the limits placed on the national government,” Zulu says in an article published by the foundation on Tuesday.
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National Treasury published its discussion document at the end of last year, immediately provoking some harsh criticism from affected parties. Currently gamblers who receive a once-off windfall from gambling are not taxed on their winnings while those who generate a frequent income from gambling are obliged to declare this as taxable income. Government has made gambling tax proposals in the past, but none of them saw the light of day.
Treasury proposed a 15% withholding tax on gambling winnings above R25 000 in 2011, including those from the National Lottery. It was supposed to be implemented from 1 April 2012. However, after consultation it was discovered that there would be complexities with enforcement and compliance, Treasury says in its discussion document.
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