Spanish lottery sellers want to raise the Christmas ticket to €25: good deal or rip-off?
Spain's lottery sellers want to raise the Christmas lottery ticket from €20 to €25. With the top prize at €248,000 net and the taxman taking a big cut, the hike would mostly benefit the state.
English · Original discussion in Spanish · Published
Spanish lottery sellers want to raise the Christmas ticket to €25: the final straw for the 'stupidity tax'
For years we've been hearing that Spain's Christmas Lottery is a tax on the stupid. Now the lottery sellers want to make it even more expensive: raising the ticket from €20 to €25. The proposal has not gone down well among those who already see the draw as a rip-off for the poor. And with good reason: the top prize of €300,000 per ticket shrinks to €248,000 after tax. With that, in many cities you can't even buy a decent flat. In Spain, earning €43,000 a year puts you in the upper class, so €248,000 makes you high aristocracy, but the underlying problem is a different one.
The key lies in the elasticity of demand. The lottery sellers assume that ticket sales won't fall even if they raise the price by 25%. If they sell the same number of tickets, they'll take in 25% more. But the state won't just stand by: of that extra €5, the tax office (Hacienda) will probably keep €4.50, according to the sharpest estimates. What's more, the tax-free minimum on prizes won't go up, so the state will recover even more. The result is that the seller barely gains, the state collects more, and the buyer pays more for the same thing.
On the other hand, some argue the ticket should be even more expensive, but with bigger prizes. If the top prize rose to €500,000 net, perhaps the game would be more attractive. But that's not the case. What's being proposed is simply making the ticket pricier without improving the real prize. A measure that would drive away the most price-sensitive buyers and, on top of that, would fit neatly with the state's fiscal greed. In the end, the loser is always the same one: the person who plays.
With this hike, the Christmas Lottery cements itself as a tidy business for the state and a ruin for the dreamer who hopes to win the jackpot. Because, as the saying goes, 'the lottery is a tax on people who are bad at maths'. And now, more expensive.
For years we've been hearing that Spain's Christmas Lottery is a tax on the stupid. Now the lottery sellers want to make it even more expensive: raising the ticket from €20 to €25. The proposal has not gone down well among those who already see the draw as a rip-off for the poor. And with good reason: the top prize of €300,000 per ticket shrinks to €248,000 after tax. With that, in many cities you can't even buy a decent flat. In Spain, earning €43,000 a year puts you in the upper class, so €248,000 makes you high aristocracy, but the underlying problem is a different one.
The key lies in the elasticity of demand. The lottery sellers assume that ticket sales won't fall even if they raise the price by 25%. If they sell the same number of tickets, they'll take in 25% more. But the state won't just stand by: of that extra €5, the tax office (Hacienda) will probably keep €4.50, according to the sharpest estimates. What's more, the tax-free minimum on prizes won't go up, so the state will recover even more. The result is that the seller barely gains, the state collects more, and the buyer pays more for the same thing.
On the other hand, some argue the ticket should be even more expensive, but with bigger prizes. If the top prize rose to €500,000 net, perhaps the game would be more attractive. But that's not the case. What's being proposed is simply making the ticket pricier without improving the real prize. A measure that would drive away the most price-sensitive buyers and, on top of that, would fit neatly with the state's fiscal greed. In the end, the loser is always the same one: the person who plays.
With this hike, the Christmas Lottery cements itself as a tidy business for the state and a ruin for the dreamer who hopes to win the jackpot. Because, as the saying goes, 'the lottery is a tax on people who are bad at maths'. And now, more expensive.
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (36 replies).
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