An increment in taxes would slow down Mexico’s gaming growth

Government of President Felipe Calderón seeks to increase its fiscal collection and one of the strategies it could include in the budget plan for 2010, that must present in the Congress in the following days, is to take the casino taxes to 40 %.

However, that proposal could force the sector to cancel its expansion plans and fire thousands of employees, said in an interview the president of the Association of Games and Draws Licensees, Alfonso Pérez Lizaur. "If IEPS (Special Tax on Products and Services) is increased from 20 to 40 % they kill the activity, there is no way anyone can pay it”, he said.

Additionally, the measure would lead the industry to fire nearly half of its 40,000 workers, just to keep trying to keep afloat, added the representative of the industry.

The games of chance business in Mexico is mainly comprised by online casinos, bingo halls, lotteries and sportsbooks. However, traditional casino games –such as card games-are legal just in regional events in several places in the country.

Mexico collects through its main tributes, the Value added tax (VAT) and the Income Tax, around a 9 % of its growth domestic product (GDP ), compared to a 15 % for the rest of Latin America.

The gaming sector in Mexico, which according to Pérez Lizaur, represents us$ 1 billion a year in terms of incomes, and is dominated by companies such as CIE, media giant Televisa and Caliente, that does not quote in the market. He said that, if the government achieves to control illegal gaming in the country, it could charge taxes to others of around us$ 300 million a year.