"Gaming legalization to bring significant resources to Brazilian social security system"

GMB - What effect will the destination of most of the taxes collected with gaming, as predicted by the Senate bill, bring to the pension system, considering that annual collection estimate is about R$ 15 billion (US$ 4.85 billion)?
André Bittencourt - It should be noted that Brazil still has very restrictive and archaic legislation regarding gambling. Only in the lottery market, according to the World Lottery Association, gaming move 400 billion dollars worldwide in 2014, of which Brazil had only 1% share with lotteries managed by Caixa. Although I understand that there is no deficit in social security, the legalization of a series of games that already exist illegally would certainly bring a significant range of resources to the Social Security system and would help increase the revenues that are destined to payment of services in the health area, since the revenues from gambling in the form of social contribution are used to pay social security benefits, assistance and also to health care in Brazil.

What is the importance of the people who work illegally today and that, with the legalization of gaming, can also contribute to social security?
Under Brazilian law, every worker who performs paid work must pay social contribution. The quota of this worker varies from 9% to 11% depending on the salary range and the employer's is 20% of the income paid, due or credited to the worker. Thus, many people currently working in an informal way may, after legalization, have recognized their employment relationship or in the case of those who work autonomously, be included in the list of individual contributors, and therefore the contributions resulting from this paid activity will be important for increasing the collection of the system.

In your opinion, should there be some kind of specific rule for gaming industry workers when it is in operation?
The contributions resulting from this exploitation will result both from the result of the betting values ​​and from the remunerations of the workers and employers. A differentiated taxation can certainly be created with respect to the result of the values ​​resulting from the bets placed. About the contribution of workers and employers, I believe that taxation would follow the general rule (20% of the employer plus 8, 9 or 11% of the employee), thus respecting the principle of equality arising from the Federal Constitution of 1988.

Taking as an example countries that already have a strong gaming industry, what is the best model of foresight for the sector?
In fact, what will be fundamental for effective collection of revenue is the way of monitoring both the outcome of the bets, the resulting labor relations and the activities of the self-employed in the sector. If that control is not efficient, even with a very strong gaming system, the evasion could cause great damage to the system. The IRS today presents a good system of data crossing. By linking such a system to effective and strong monitoring of employment relationships, the whole system will be strengthened.

Today there are many professional bettors in sports betting, lotteries, among other modalities. What is the best path to this activity when it comes to providence? Is there any way for these professionals to contribute?
The lotteries authorized by the Caixa Econômica Federal and the work activities resulting from this activity, since they are already legalized, are included in the social contribution system and, therefore, are already part of the Social Security fund. Those that are still illegal are the ones that would bring new contributions to the system. Every bettor who cashes bets is indirectly contributing to the Social Security system, since a percentage of the amounts resulting from the bets is paid as a contribution.

Many international investors are expected to come to Brazil after gaming legalization. Can the momentum experienced by pension funds in Brazil influence the decision of these investors in any way?
What will be fundamental to attract investors is the legalization and the establishment of clear rules regarding the form of effective employment contracts and the payment of taxes and social contributions. What often distances the international investor is the difficulty of understanding the Brazilian tax system. If clear rules are established to allow the investor to make a medium and long-term forecast, there will certainly be a large increase in the sector, which will bring fresh air to the economy, an increase in employment and income, and consequently in the public budget.

To conclude, what is your perspective of the Brazilian pension system with gambling being a source of income, both through the transfer of taxes and the contribution from the generation of new jobs?
Since the amounts contributed by the Social Security system are destined for benefits and health payments, the entire population can feel the positive effects of both the distribution of income and the improvement of public health that is currently seeking relief.

Source: GMB
Author: Pedro Henrique Feitosa