Brazil's Workers' Party leader in the House of Representatives, Lindbergh Farias, proposed a new bill (PL 5,076/2025) on October 9th, planning to raise the gambling tax rate in the Brazilian market from the current 12% to 24%, doubling the rate. The proposal was made the day after a temporary measure (PM 1,303) that would have raised the tax rate to 18% was withdrawn by the House. According to the bill, half of the additional tax revenue will be used for social security and public health actions, with the remainder allocated to sports and culture. The bill notes that even after the tax increase, Brazil's rates will still be lower than those in countries like France and Germany, and the increase aims to reduce the attractiveness of gambling and provide funds for the healthcare system. Brazil is currently the third largest gambling market in the world, only behind the United States and the United Kingdom.
Bill Proposal and Tax Adjustment
Brazil's Workers' Party leader in the House of Representatives, Lindbergh Farias, officially proposed Bill PL 5,076/2025, suggesting raising the gambling tax rate in the Brazilian market from the current 12% to 24%. This increase represents a doubling of the rate, significantly increasing the tax burden on gambling operators.
The bill was submitted on October 9th, coinciding with the day after a temporary measure (PM 1,303) that would have raised the tax rate to 18% was withdrawn, showing the government's continued determination to push for higher taxes.
Tax Revenue Distribution and Usage Planning
According to the bill, the 24% tax rate will bring a clear distribution plan for the new tax revenue. Half of the funds will be specifically used for social security and public health actions, supporting the development of Brazil's public healthcare system.
The remaining part of the tax revenue will be allocated to sports, culture, and other areas, promoting social enterprise development and reflecting the principle of "taking from the people, using for the people" in tax distribution.
Legislative Background and Previous Efforts
This proposal is the Brazilian government's second recent attempt to raise the gambling tax rate. The previous temporary measure PM 1,303 aimed to increase the tax rate by 50%, but was abolished before last week's vote, along with a retrospective tax plan for activities before the regulation of licensed operators.
The failure of the temporary measure raises questions about the ruling Workers' Party's ability to implement economic policies, and the new bill marks the government's renewed effort to push for higher taxes.
International Comparison and Tax Positioning
The bill specifically points out that even with an increase to 24%, Brazil's gambling tax rate is still lower than those in other countries like France and Germany. This comparison aims to illustrate the reasonableness of the tax increase proposal, easing potential resistance.
Brazil's current 12% tax rate is relatively low, and raising the rate helps align with international standards while increasing government fiscal revenue.
Social Issues and Legislative Motives
The bill emphasizes the socio-economic problems accompanying the growth of the gambling industry, noting the severe impact of gambling addiction on individual mental health and family finances. The tax increase is seen as a policy tool to reduce the attractiveness of gambling.
The bill states: "The continuous increase in bets and the number of bets is accompanied by a series of social and economic problems. Some jokes may eventually lead to gambling addiction."
Current Status of the Brazilian Gambling Market
According to Comscore's 2023 research, Brazil is currently the third largest gambling consumption market in the world, only behind the United States and the United Kingdom. This market position provides a basis for the government to raise the tax rate.
The huge market size means that even a small tax increase can bring significant fiscal revenue growth, supporting the government's public spending plans.
Political Background and Ruling Party Stance
The bill's proposer, Lindbergh Farias, is a member of Brazil's Workers' Party, which is currently in power, led by President Luiz Inácio Lula da Silva. The tax increase proposal is consistent with the economic policy direction of the Workers' Party.
The failure of previous tax increase efforts puts pressure on the ruling party, and the success or failure of the new bill will affect the implementation of the government's economic agenda.
Expected Impact and Industry Reaction
If the bill passes, the doubling of the tax rate will have a significant impact on the Brazilian gambling industry, potentially increasing operator costs, affecting market prices, and consumer behavior. The industry is expected to oppose this.
The tax increase may also affect the investment decisions of international gambling operators in the Brazilian market, changing the competitive landscape.
Public Policy and Health Considerations
The bill characterizes gambling as an "activity harmful to health and family economics," thus suggesting the imposition of higher-than-average taxes. This policy orientation emphasizes the negative externalities of gambling.
The increased tax revenue is used for the healthcare system, reflecting the "harm reduction" public policy approach, using tax adjustments to regulate behavior and provide funds for related social costs.
Legislative Prospects and Next Steps
The new bill will enter the Brazilian legislative process, requiring review by the House of Representatives and the Senate. Given the failure of the previous temporary measure, the passage of the bill faces some uncertainty.
The legislative process will spark widespread discussions about gambling regulation, tax policy, and social policy, with active participation from all stakeholders.
