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By Christopher Costigan, Gambling911.com
Following news over the past two weeks that the Government of Costa Rica is considering taxing online gambling firms operating in that country, operators have told Gambling911.com they would leave if push comes to shove.
On Tuesday, July 21, Finance Minister Guillermo Zúñiga announced that the Finance Ministry will introduce a bill in the Legislative Assembly to impose a special 2 percent tax on gambling revenues – online and offline – earned in
Costa Rica, according to the Tico Times. The bill is set to reach the Legislative Assembly on Monday, Aug. 3, and a vote on its approval is expected to be held sometime in mid-August.The Finance Ministry estimates that the proposed 2 percent tax will generate $85 million in government income.
“The principal idea of the bill is to regulate activity,” Zúñiga said. “Gambling is something that we are currently not monitoring and, thus, not taking advantage of. If we can regulate it, it could create millions of dollars for the economy.”
But those numbers are unrealistic should much of the
online gambling sector bolt. Costa Rica’s land-based casinos generate very little revenues in comparison.“They (The Costa Rican Government) needs to understand our business and the consequences before passing such a law,” said Mickey Richardson, CEO of BetCRIS.com, the largest and most established sports betting operation in
Costa Rica in terms of bet sizes taken. “Hopefully nothing will happen. I think they would ask for our input and then we might be more supportive.”Richardson estimates that the industry both directly and indirectly employs some 10,000 people, perhaps even more.
“The industry pays above average salaries and contibutes substantially to household incomes,” he said.
Learning From Great Britain’s Mistakes
Costa Rica may want to observe what is currently transpiring in the United Kingdom right now.
The country’s second largest bookmaker, William Hill, this past week unveiled plans to move its Internet operation from England to Gibraltar in order to cut its tax bill.
The Sunday Times said UK-based internet betting companies pay 15 percent of their gross profits in tax, and that a move offshore by
William Hill would put pressure on its rivals to follow suit.Ladbokes, Great Britain’s largest bookmaker, may do just that. Ladbrokes is keeping its cards close to its chest with a board meeting due the day after William Hill’s results, according to the Daily Mail. But while it is understood to prefer staying in the UK, company sources admitted it would have to respond to any move by
William Hill.The choice between the United Kingdom and offshore locales such as Gibraltar is a practical “no brainer”. Those businesses operating in England pay a 15 percent tax while those based in Gibraltar pay 1.5 percent.
According to the Gibraltar Chronicle, a mass exodus from the UK could spell trouble for the Racecourse Owners Association who would see a drop of £45 million in lost tax as well as a £30 million loss in 10% levy paid to them. The Department for Culture, Media and Sport has acknowledged that it does want to level the playing field with overseas businesses but crucially predicts little, if no action prior to next year’s General Election.
Panama Might be Best Bet
Those
Panama in the past few years has opened its doors to
online gambling operators, though few have actually moved there due to Costa Rica’s “hands off” stance until now.“I love Panama,” Richardson admits.
BetCRIS has already opened a Caracas, Venezuela office for its Latin American clientele, though few would argue Caracas is a fair trade with
Costa Rica during these times.Panama City on the other hand resembles Miami in many ways, with modern skyscrapers and some of the best eating establishments rising up over the last 15 years. The Central American nation itself resembles
Costa Rica in that it abolished its army over the last decade and is now among the most stable nations in all of Latin America.For now, Richardson admits it’s a “wait and see” decision. Nobody seems overly concerned just yet.
In the past, the Costa Rican Government has attempted to increase licensing fees for
operators, but few paid them and the requirement was eventually dropped.Costa Rican President Oscar Arias, Nobel Peace Prize winner and current mediator of the Honduran standoff, had an interesting op-ed piece in the Washington Post last week.
Arias writes that the current Honduran conflict is not an anomaly but the natural outgrowth of governments spending more on their militaries than on the basic human needs of their people. The Honduran conflict, says Arias, “demonstrates that the combination of powerful militaries and fragile democracies creates a terrible risk.”
“Until we improve this balance,” Arias continues, “we will always leave open the door to those who would obtain power through force — whether a little or a great deal, approved by the majority or only by a few.
Costa Rica abolished its own army in 1948. Oscar Arias was elected to a second term as President of Costa Rica in 2006.
The International Court of Justice Monday gave both Costa Rica and Nicaragua partial victories in their border dispute over the San Juan River.
The world court at The Hague in the Netherlands ruled Costa Rica has commercial navigational rights on the river under the 1858 Treaty between the two Central American countries.
However, the court’s ruling posted on its Web site also said Nicaragua has the right to require Costa Rican vessels to check in at Nicaraguan posts at both ends of their route on the river and that passengers be required to carry passports or identification documents.
The court ruled people, including tourists traveling on the San Juan river on Costa Rican vessels, are not required to obtain Nicaraguan visas or buy Nicaraguan tourist cards.
In addition, the court said, local inhabitants on the Costa Rican bank have the right to navigate the river for purposes of “the essential needs of everyday life which require expeditious transportation.” Nicaragua is to respect the rights of Costa Ricans living along the river bank to fish for subsistence purposes.
Official Costa Rican vessels can use the river “in specific situations” to provide essential services to its citizens but not to carry out police functions, including transporting personnel between police border posts, the court ruled.
Nicaragua has the right to issue departure clearance certificates to Costa Rican vessels but not to charge for them, the court said.
Nicaragua also can impose timetables for navigation on vessels navigating the river and require Costa Rican vessels to display the Nicaraguan flag if they have masts or turrets.
Costa Rica, the country of fewer than 5m people sandwiched between Panama and Nicaragua, tops a new global ranking for combining a happy and long life with limited environmental degradation.
The country blends beautiful countryside, a great diversity of species and has long since got rid of its army. The merger of its energy and environment ministries has reversed deforestation and helped it produce 99 per cent of its energy from renewable sources. It has also scored highly, relative to other developing countries, in surveys of poverty, press freedom and democracy.
The Happy Planet Index, “Why good lives don’t have to cost the earth”, published on Saturday by the UK-based new economics foundation, combines measures of life expectancy, happiness and ecological footprint to assess the sustainability of growth in 143 countries.
That the top 10 in the list of “greenest and happiest” nations is dominated by Latin America might raise a few eyebrows, as the region is better known in the western imagination for its slums, inequality and coups. Zimbabwe languishes at the bottom along with a dozen other south, east and central African countries.
But the Latin Americans score highly, the report suggests, due to non-material aspirations and strong social capital among friends and relatives. The grim performance of the developed world might also prompt some westerners to cast doubt over the value of the report. Among the rich nations, the highest placed country is the Netherlands – but it manages only 43rd.
The UK languishes midway down the table – 74th, behind Germany, Italy and France but ahead of Japan and Ireland. The US fares particularly poorly, in 114th place. The western countries have long life expectancy and people are reasonably happy, but the countries suffer in the rankings due to their ecological footprint, reflecting high levels of consumption.
The challenge for the west, the report says, is not to keep increasing incomes but to aim for more meaningful lives and stronger social ties. That might be a leap too far in the near term but the index is released when policymakers are exploring broader measures of progress rather than a desire to boost growth. French President Nicolas Sarkozy’s “Commission on the measurement of economic performance and social progress” is due to report soon.
Critics of such measures and summary indices say they are based on arbitrary data and calculations but most welcome their contribution to the policy debate.
“HPI is one of the several attempts to go ‘beyond GDP’ and to bring attention to important aspects of our life,” Enrico Giovannini, chief statistician at the Organisation for Economic Co-operation and Development, said. But, he added, “It is impossible to capture in a single indicator the complexity of our society.”
