Windhoek-Namibia’s drive for the enactment of a Lottery law has recently come under fire from various quarters of the country with some labelling the move as a ‘tax on the poor’ manoeuvre.
Concern was raised over the draft bill’s supposed vagueness, regarding the distribution of the accumulated money, and its apparent shortcomings in addressing socio-economic evils related to gambling.
A law allowing for a state lottery in the country has been in place since 2002. However, government has recently introduced a new bill in Parliament to regulate the lottery.
In a recent report by the Institute for Public Policy Research (IPPR), Max Weylandt, an IPPR research associate focusing on analysis of parliamentary matters, maintains that the Namibian draft Lottery Bill does not contain many details about addressing the problems associated with gambling.
“It makes it illegal to sell tickets to minors, and it prohibits selling tickets to people on credit. These are good first steps. It would also be useful to establish funding to research gambling addiction in Namibia, and any impact of the lottery on addiction as well as mechanisms to help addicts,” Weylandt said.
The report highlights the fact that in many respects lottery winners turn out to be amongst the most miserable people within their localities. According to the report, studies suggest that lottery winners save only 16 cents of every dollar they win.
“Finally, when people become lottery winners, other people in their lives put a lot of pressure on them to share the money. These demands can become violent, and many lottery winners end up regretting their win,” Weylandt reasons.
He cited an example of countries that offer winners the payment of an annuity rather than a lump sum of money – in other words, paying winners’ money out in yearly instalments rather than one big total, in an attempt to encourage better spending decisions.
It however, remains to be seen if Namibia will follow suit.
In the Namibian context, the Harambee Prosperity Plan attempts to steer lottery winnings to productive uses, stating, “Winning proceeds will be paid partly in cash, as a compulsory investment in housing and pension”.
However, the bill in front of Parliament does not contain this specifically, because it instead passes the power to decide on how the winnings will be claimed to a board, and this notion does not sit well with the IPPR.
“It makes sense to leave the finer details to the board – but it would also be helpful if the law said the board had to consider productive ways of paying out the money.
“It would be useful to have the law suggest an annuity option. In addition it is absolutely important that the law states that winners may remain anonymous and makes sure privacy protections are in place to protect winners from criminals wanting to take their money,” Weylandt suggested.
Taxing the poor?
While acknowledging that there are potential benefits to a national lottery, the IPPR’s associate researcher says there are also important policy issues to consider as the merits and demerits of the lottery are debated.
Two key issues, the report reads, include the implication on the poor, who, according to the HPP, should be the ultimate beneficiaries of the lottery, as well as the question of who ultimately benefits.
This is in light of the fact that mostly poor people pay for the special tax i.e. the lottery.
“Across countries, evidence shows that people with lower incomes buy more lottery tickets than people with high incomes. For a person with a good job, a few N$10 tickets are not a problem.
“But this money can make a huge difference to a poor person, who might still play because he or she is desperately hoping to get lucky,” Weylandt’s reports maintains.
The report suggest unequivocally that lotteries “essentially tax poor people to pay for the projects they support”
It further states that, ideally, taxes should be “progressive,” by making richer individuals pay more than poorer individuals and in that way ensure the equal redistribution of money in the society. However, lotteries, according to the IPPR, do the opposite.
The draft bill stipulates that the functionality of the State lottery will commence with the appointment of a Lotteries Board by the minister of environment and Tourism.
This board will be entrusted with the running of the lottery and control of the State Lottery Trust Fund.
The board, according to the draft bill will have the prerogative to either run the lottery or to outsource the running of the state lottery to a private entity.
The Bill further sets out the modalities of how the lottery will work, with the board setting the rules on how and where tickets are sold; what they cost, the winnings, how winners are drawn and how the prizes are claimed.
When all the money from ticket sales come in, money for prizes and money for operating expenses are subtracted – as percentages set by the minister – as well as a commission for the license holder if the board does not carry out the lottery itself.
The rest of the money, according to the draft Bill, goes into the Trust Fund, which then distributes this money to various causes.
An unspecified portion, as determined by the minister and the board, goes towards grants for a “specific good cause” while another unspecified portion goes to “any other matter approved by the Minister” as long as the minister considers the development of Namibia in deciding where the money goes.
It is however, unclear as to how the aforementioned ‘specific good cause’ will be identified. Nor are there clear indications as to how they will corruption proof the processes.
Meanwhile, Namibia will not be the first country in the region to have a lottery. South Africa established its lottery in 2000, and Botswana passed a law last year to create one.
In contrast, Dr Asoka Seneviratne, a director at a local institution of higher learning and former special advisor in the presidency between 2006 and 2011 was positive about the proposed lottery.
He said that government was taking the right direction by deciding to investigate the feasibility of establishing a state lottery during the Harambee period because it would support and accommodate the concern of the public to participate and contribute to poverty eradication, which was a multifaceted development challenge.
He made these observations in a commentary published in the New Era newspaper late last year.
Seneviratne maintains, “That a state lottery is a very promising, constructive and effective instrument to find extra funding for programmes and activities of poverty eradication together with other benefits it entails.