Would a Gambling Sin Tax Change Your Betting Habits?

You can also access this podcast on iono.fm here.

ADVERTISEMENT

CONTINUE READING BELOW

JIMMY MOYAHA: Today, we’re diving into the recent calls from South African politicians and other stakeholders advocating for a ‘sin tax’ on gambling. This initiative aims to reduce its appeal and promote more awareness around the matter.

With me is Lesedi Seforo, project director of tax advocacy at the South African Institute of Chartered Accountants [Saica], who will shed light on this topic.

Lesedi, good evening, and thank you for your presence. Let’s kick off by discussing the existing tax provisions related to gambling. What do these regulations entail for gamblers and entities like casinos?

LESEDI SEFORO: Thank you, Jimmy; it’s a pleasure to be here. I also want to extend my gratitude to the listeners.

Currently, the law does not impose taxes on occasional gamblers’ winnings.

This is regarded as ‘of a capital nature’ under tax laws.

However, for those who gamble professionally or treat it as a business, their earnings are subject to taxation.

In those scenarios, individuals can offset their losses against winnings, being taxed akin to salaried individuals based on applicable tax brackets.

Gaming service providers are generally monitored by provincial regulatory bodies – such as those in the Western Cape or Mpumalanga – with taxes being collected at the provincial tier.

JIMMY MOYAHA: Current trends indicate a surge in gambling participants. Recent data shows record revenue levels from these companies this year.

We have surpassed R1 trillion in total wagers within the last year, raising significant concerns.

Some gambling firms have reported a revenue rise of 25%.

Given this context, what is the position regarding taxation? There’s a call to tax individual gamblers, but a tax is already in effect. Is it equitable to suggest that either the gambler or the service provider should bear a heavier tax load? What’s the rationale behind this?

LESEDI SEFORO: The proposed ‘sin tax’ is aimed at gamblers to dissuade such engagements.

Excessive gambling is acknowledged to escalate various societal problems.

A few years back, a sugar tax was enacted to tackle high sugar consumption, leading to an increase in sugar-free options like Coke Zero and Sprite Zero.

A comparable tax on gambling consumers could also be implemented. However, the effectiveness of such a tax hinges on the concept of ‘price elasticity’ of demand – with certain products potentially retaining consumers despite price hikes.

It is hoped that gambling does not fall into this category, as its growth is detrimental to society.

JIMMY MOYAHA: You’ve touched on an intriguing aspect concerning price elasticity in light of the proposed sin tax. We have witnessed sin taxes on tobacco and alcohol, but these haven’t significantly deterred consumption. Would enforcing a tax indeed resolve the issue, or is a more holistic approach necessary? Cities like Las Vegas and Macau flourish without imposing steep tax regulations yet maintain robust employment levels.

ADVERTISEMENT:

CONTINUE READING BELOW

The increase in gambling activity within South Africa can largely be linked to rising unemployment rates.

Add to this the rise of online betting platforms, which also plays a pivotal role in this scenario.

These companies typically argue that they don’t compel anyone to gamble. How can we approach this issue judiciously while considering its societal effects? Can taxation effectively tackle the issue?

LESEDI SEFORO: Taxation might serve as one component of a broader set of regulations aimed at addressing this issue. For example, similar to laws regarding tobacco, companies could be required to display cautionary statements in casinos or on betting platforms, advising users to moderate their gambling activities.

It’s worthwhile to note that in the US, where gambling is subject to taxes (unlike in South Africa), perhaps we should examine those regulatory frameworks closely.

Alongside any suggested tax on gambling winnings, a well-rounded system of regulations may be essential to tackle this concern effectively.

JIMMY MOYAHA: One suggestion from advocates is to limit gambling-related advertising and to develop legislation that treats this issue comprehensively. How should we assess the responsibility of these companies in this area? For instance, Betway sponsors cricket and local leagues. Are we implying that these companies should either face restrictions on their operations in South Africa or adhere to stricter regulations due to their aggressive marketing approaches?

LESEDI SEFORO: That’s exactly the scenario. Without significant governmental intervention, companies won’t hesitate to promote their offerings. This trend has been visible in tobacco regulation over the years.

Extensive legislative reforms have significantly curtailed public smoking, especially indoors.

We need similar measures in place to manage gambling advertisements, particularly during prime viewing times where these ads are prevalent.

JIMMY MOYAHA: There’s much to consider as we navigate through the numerous firms in this domain and the potential implications. Thank you, Lesedi, for your insights and perspectives. I look forward to seeing proactive actions taken to tackle these matters as we move forward.

Lesedi Seforo is the project director for tax advocacy at the South African Institute of Chartered Accountants.

Stay informed with Moneyweb’s in-depth finance and business news on WhatsApp here.

  • Related Posts

    Assistance and Market Opportunities for Growing Township Businesses

    Johannesburg – A duo of emerging black-owned enterprises has received support to enhance their presence within the local township economy, thanks to an initiative by Tiger Brands designed for business…

    Continue reading
    They Treated Us Like Beasts!

    Mzansi artist Mawhoo has voiced her anger following a distressing experience at Life Fourways Private Hospital. The singer, renowned for her hit “Gucci,” took to social media to share claims…

    Continue reading

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Assistance and Market Opportunities for Growing Township Businesses

    Assistance and Market Opportunities for Growing Township Businesses

    They Treated Us Like Beasts!

    They Treated Us Like Beasts!

    AVAX Price Drops, QUBIC Stays Steady, and BitLemons Shines as a New Contender in GambleFi

    AVAX Price Drops, QUBIC Stays Steady, and BitLemons Shines as a New Contender in GambleFi

    Gauteng Derbies Shine in Vodacom URC Spotlight

    Gauteng Derbies Shine in Vodacom URC Spotlight

    Trump and Putin Align on Ukraine Negotiations Amid Shift in US Policy

    Trump and Putin Align on Ukraine Negotiations Amid Shift in US Policy

    National Epilepsy Week: Raising Awareness About a Global Condition Impacting Millions

    National Epilepsy Week: Raising Awareness About a Global Condition Impacting Millions