Lotto taxes need to be revised

The 20% tax on lotto winnings is a ready and viable fund that helps fuel many of the government's most vital and pressing projects and services. It is, for example, a backbone component of what sustains the Build, Build, Build Program launched during the administration of Rodrigo Duterte and continued by President Ferdinand Marcos Jr.

A 20% tax on anything is a huge cut any which way anyone looks at it. But because it is slapped on lotto winnings, which are essentially proceeds from gambling, often sugar-coated as a windfall from heaven, most people take the immensity of the cut in stride. They take for granted the fact that it is actually unfair and inequitable consequently.

That the 20% tax is levied uniformly on all winnings in all types of lotto games does not make the tax fair and equitable. Indeed it is actually this uniformity that makes the tax unfair and inequitable. Imposing the same amount of tax on all winnings, big or small, does not add up to a very happy count-your-blessings experience.

The prizes of lotto can range from a low of ?5 million to as high as the prize can go before being won. I am not sure about this but what I can remember is that it went up to something like ?500 million. That is a cool half-a-billion. It is a tsunami of inflation-rapped Philippine pesos whose actual import ordinary people will never comprehend.

Now slap that ?500-million prize with a 20% tax, and the poor tricycle driver who won it will still never get around to comprehend what the remaining ?400 million means to his life. Maybe he will just throw it all away. But so what? That is his money. And with that kind of money, it will really take him a long long while to get wiped out.

But what if he won only the minimum ?5 million? Take away ?1 million representing the government's 20% share in taxes and the poor tricycle driver will only have ?4 million left to binge or build a future. Now, ?4 million is no measly amount for one who pedals all day for ?10 a fare. But so is a ?1-million tax. It is a whammy.

My proposal, if I may, is to reduce the 20% tax to just 5% on all winnings from ?5 million to ?25 million, and 10% from ?26 million to ?50 million. It should be the winnings of more than ?50 million that ought to be slapped the 20% tax. Why, the government may even up its take to 30% of winnings in excess of ?100 million.

The point is that the bigger the prize the more acceptable the tax will be because there will still be plenty left to go around and enjoy the winnings. The tax does not end up making the big prize winner feel deprived, or worse, feel like being robbed by his own government, which is what the small prize winner will feel on being slapped the same hefty tax.

And because there are crooks in government and there is really no assurance where the taxes go once they are collected, at least the bulk of any wayward taxes are taken from the big winners who, with the huge money he still has left, will not mind that he has been fleeced. But the small winner will not only be skinned, he will be skinned for nothing.