Government wants a piece of the pie

Costa Rican Finance Minister Guillermo Zuñiga has introduced a bill into the legislative assembly, that if approved, would tax all online and offline gambling operators based in Costa Rica 2% on all revenues generated. The new law was received by the assembly on August 3rd and would have been put into approval earlier this week. There have been no official results posted in “La Gaceta” the official government news paper, which is responsible for making all laws official in Costa Rica, but many believe this is a turn in the wrong direction for trying to get a piece of the online betting industry. For over 10 years the online gaming industry has fueled the economy much more than tourism ever has. It employs over 10k people and has attracted much more than just the online operators. Because the industry has created a new economy class with expendable income, many of the big retail and food chains have found a niche clientele. The proposed 2% tax would hinder that progress due to the appeal of neighboring country, Panama. There are many operators considering the move if the law is approved. "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 one of the biggest and oldest sports books in the country. He claims they have already considered the option of Panama, which in recent years has developed more into an offshore Miami, a big difference from its surrounding third world countries. Source: insidecostarica.com The Costa Rican government has realized that the gambling business is a very profitable one. However, by taxing the industry, the companies would find incentives to move somewhere else. Once they leave, there will be a great amount of middle class population without a job. What kind of population? Well, you may think at first that the college dropouts and the unemployed are the ones working at these sites. If you did, you would be wrong. Is the college graduates the ones working there. The ones that actually prefer to work in the gambling industry because it pays better than to work in their profession for less. Lots of Business Administration Major college graduates work for these companies. If these companies were to leave, what would happen to this middle class? They would attempt to find a job in their industry with a lower pay. Other ones, would try to find jobs in the outsourcing technology industry with companies like: Intel, Cisco and HP. However, those companies are suffering the consequences of the US recession. Result? Effectively the 2% tax works for a few months while the companies move. Then, it stops working and effectively lots of people loose their jobs. We will see how it plays out.