The Minister of Finance, Fernando Haddad, declared that he will regulate sports betting and that the collection will serve to offset losses with the correction of the Income Tax Table. It's not what the minister will do – he has to do it, because the blame for omission will fall on him and he can be held responsible for it.
With such a measure, the government will raise enough resources not only to cover the hole opened with the correction of the IR table, but there will be money left over to invest in policies to combat such desperate social problems that the country is going through.
Economics mixes with law, making it clear that today it is not possible to analyze only one of the branches of knowledge. All are intertwined.
The government cannot stop there. There is a lack of normative regulation for what is called the regulatory framework for gaming, which will bring to public coffers close to R$ 20 billion (US$ 3.9b) in taxes, without any public expenditure. Just fundraising. But, as what we have for now is the advent of the law commented by Minister Haddad, let us make brief notes on the subject.
Law 13,756, of December 12, 2018, when disciplining the National Fund for Public Security (FNSP), determined that “the product of the collection obtained through the taking of bets or the sale of lottery tickets, in physical means or in virtual medium, will be destined” not only for the referred fund, but also for other purposes described in articles 15 to 20. It is not necessary to identify them for the purpose of this work.
In article 29, the same law institutes what it calls fixed-odds betting, “in the form of an exclusive public service of the Union”. What does this mean (following Bourdieu –“qu’est ce que parler veut dire”– what does speaking mean)? It means a “betting system relating to real sports-themed events”. Clarifying: there is any event (football, volleyball, basketball, tennis and others) and the bettor chooses the winner and bets a certain amount on it. If you win, you receive the “prorating”.
The same article 29 in its 2nd paragraph clarifies that “the lottery of fixed quota bets will be authorized or granted by the Ministry of Finance and will be operated exclusively in a competitive environment, with the possibility of being commercialized in any commercial distribution channels, physical and in virtual media.” That is, the possibility remains open for private companies, by concession from the government, to explore sports betting in the online environment.
A first difficulty arose: the law would be regulated in two years, extendable for another two. As the law is dated December 12, 2018, the final term would be December 12, 2022. It turns out that the regulation that should be issued by the Finance Ministry did not occur. Legal anomie was created, that is, the absence of disciplinary norms.
The fact would require going to the Judiciary, which would inevitably meet the applicant's claim to carry out the activity regardless of regulation. It is that if the State cannot, with the purpose of legislating, commit unconstitutionalities, equally, it cannot, under the pretext of not issuing regulatory decrees, fail to meet the interests housed in the norm, which is unconstitutional. The firs occurs by action in which it exceeds the limits of what was conferred; the second for failing to operate the effectiveness of the law.
Celso Antonio Bandeira de Mello states that “the Chief Executive cannot paralyze the effectiveness [of the law] by omitting to issue the general measures indispensable for that purpose. Admitting that it has the freedom to thwart its application would imply admitting that the Executive has the legal right to overrule the decisions of the Legislative Power. So much so that failure to regulate is characterized as breach of the legal duty that art. 5, 71 of the Federal Law establishes” (“Administrative Law Course”, ed. Malheiros, 2013, chapter 6, item 23, page 358).
In the same sense, Agustin Gordillo, a notable Argentine administrative activist (“General principles of public law”, RT, pages 105/106) when saying that “the State cannot, under the pretext of legislating, change individual rights; therefore, it cannot, under the pretext of not legislating, destroy those same rights.”
I understand, therefore, that the rule is in force, regardless of the absence of regulation, which legitimizes its recipient to open the betting site, receive them and manage the business in the way he sees fit. The omission of the State harms the rights of third parties.
Article 30 of the law establishes how to allocate the proceeds from the collection of fixed quota bets.
Once, as I said, the executors are free from the constraints of state omission, they can operate the bets.
What would be the tax result arising therefrom? That is, if the executors are qualified to operate sports-themed betting sites, what would be positive for the public authorities?
First, it should be noted that the State does not have to disburse any resources to put online sports betting into action. Second, income tax will be levied on winnings obtained with prizes resulting from betting on the fixed-quota lottery. First federal tax collection. All federative entities receive their share.
As the activity is regarded as an exclusive public service of the Union (article 29), of doubtful affirmation, but thus understood by the STF as a public service (vote of Minister Gilmar Mendes, in ADPF 492/RJ) which, after a long doctrinal exposition, clarifies: “Based on the so-called formalist or legalist perspective, what defines the public service is not the subjective assessment of the social relevance of the activity, but rather the legal regime of public or private law that is related to it” (page 9 of the vote ). It is public service in the formal sense. From the angle of essence, the matter is controversial; but let us stick with the solution found by the Supreme Court.
As it is a public service of the Union, it is evident that it is responsible for taxation on the activity. Therefore, its release occurs through the payment of an inspection fee, as provided for in article 32 of the said law by establishing: “generating the regular exercise of the police power referred to in paragraph 2 of art. 29 of this law, and is levied on the total allocated to the award distributed monthly.”
Thus, we have an active subject: Union; taxable person: executor of the activity considered public service; taxable event: regular exercise of police power over online or physical betting; calculation base: total destined to the prize distributed monthly (final part of article 32). Of the product from physical bets, 80% are used to pay prizes and pay income tax; if by virtual means, 89% are destined (letter of item 1 of article 30, combined with letter a of item 2 of the same article).
The law determines, on the other hand, that the inspection fee is levied on the “total allocated to the monthly award” (final part of article 32).
In this step, divergences are born. The tax is a signal tribute, that is, bilateral, that is, it depends on a reciprocal activity. The chargeable (or enforceable) event is practiced by the tax payer, but requires a benefit from the State. The limit of the amount of the fee, therefore, cannot be established by the value of the award, but by the “exercise of police power”. State activity cannot fail to be provided, much less at an inspection fee that demands action by the State.
The limit of the tax requirement must be delimited by the measurement of the activity that must be carried out by the State. It cannot be simply a result of the “total allocated to the prizes distributed monthly”, as established by the final part of article 32 of the law under analysis.
As I wrote, it is in the material aspect of “the levy hypothesis that the taxable basis is found, that is, the measurable attribute of the levy hypothesis on which a factor will apply for calculating the amount of the tax to be paid” (“Police fees”, 2nd Ed., RT ed., 2004, p. 27). Geraldo Ataliba stated, from the top of his majesty: “The activity carried out by the Public Administration constitutes the taxable event” (ob. Cit., p. 54).
The inspection fee stems from the activity carried out by the State. The hypothesis of incidence will therefore, and always, be an action by the Public Power directed at an individual and “the enforceable base will have as a quantitative limit the action developed by the State through its bodies and agents” (ob. Cit., p. 63).
This being the case, and in the case of a tax that depends on a state activity, the setting of the amount cannot take into account the circumstances of the tax payer. It adheres exclusively to binding action. From there, it is easy to see that the rate cannot have the same calculation basis as any tax. This is the case outlined in article 32 of law 13,756/2018, which applies the rate “on the total allocated to the monthly award”. Article 145, item 2 of the Federal Constitution provides for “fees due to the exercise of police power or the effective or potential use of specific and divisible public services, provided to the taxpayer or made available to him.”
Exercise is key here. Who calculates the total allocated to the prizes distributed monthly? He is the tax payer. Not the administration. The activity of public administration will merely be that of checking values. Just it. Therefore, the taxable event cannot be the amount of the award. And the basis for calculation must be the function performed by the State to check the declared amount.
Geraldo Ataliba stated that “we can see that the law creating the police fee has to take as a basis for calculation –under penalty of being unconstitutional– a criterion proportionate to the diligences conditioning the police acts, since these have no economic content” (Opinion contained in “Rev. De Dir. Público”, vol. 102/444 – also mentioned by me in the aforementioned book, page 64).
Roque Carrazza also states that the administration can only demand the fee from the person reached by the state action and “provided that the tax is based on the calculation of the cost of the state action” (cited by Ataliba in the opinion mentioned in the previous paragraph).
It is clearly seen that the basis on which the law is based is manifestly unconstitutional, because it does not take into account the activity to be carried out by the State in relation to the tax-paying citizen, but focuses on the “total allocated to the award distributed monthly ” (Article 32 of the aforementioned law).
The legislator manifestly errs when it chooses as the calculation basis a factor inherent to the activity of the entity executing the bets and not the activity to be carried out by state agents and inspectors in the face of such entity. It is that the limit of the amount due for the inspection action is what the public agent must perform. Namely, going to the place where the bets take place and there determining the amount played or if virtual, access to the site where it is developed, checking the stakes, number of agents traveling to the conference, transportation, time for checking the bets, counting of infractions, calculation of sanctions. All of this leads to the calculation of the basis for calculating the inspection fee. That is, inspection itself is measured by the time dedicated to the citizen. Hence the signal.
The municipality can only demand any fee when releasing a bookmaker that is physically located in its territory. Location fee and also inspection fee, but with another basis, namely, if the activity is being carried out in municipal territory and within what the permit allows. The State has nothing, except its share, as well as the municipality, of the tax distribution in relation to income tax.
ICMS is discounted because goods are not processed (which may have another taxable event, but not in relation to the betting activity itself); disregard IPI (except in relation to machines, but which has already been levied before); deduct ISS because there is no service performed. Better yet, there is a service, but one that is considered, as seen under article 29, treated as an exclusive public service of the Union. Therefore, this is responsible for tax collection.
There is outlined the tax part that falls on the so-called "fixed odds bets" and which has as its modality the "betting system relating to real sports-themed events". The gain stems from the accuracy of the prognosis.
It turns out that the legislator did not adequately establish the calculation basis on which the police fee is levied. This is identified as a power that belongs to the State and is constituted, in the precise lesson of Ruy de Cirne Lima, “as every restriction or limitation coercively poses by the State to the activity or private property, in order to make it possible, within the order, the competitor exercise of all activities and the perfect conservation of all private properties” (“Principles of Brazilian administrative law”, 2nd Ed., ed. Globo, Porto Alegre, p. 96).
It deals with State action that limits or restricts the action of those administered and rests on the general supremacy of the State over individuals (Celso Antonio, “Apontamentos sobre o Poder de Polícia”, RDP, 9/55). It does not stem from a specific bond, because then another legal situation would emerge, such as, for example, the case of public servants. The acts are explained in generic terms (a regulatory command, for example) or specific ones (transmitted through administrative acts).
In the cases of inspection, moreover, the exercise of police power is not exhausted in the issuance of an act, but constitutes a procedure (verification, verification of data, documents, verification of values, calculations). It may culminate in an act – the tax requirement and its amount.
In short, there is no way to dissociate the exercise of police power and the amount to be charged in the form of a fee from the effective performance of public agents. You can never have a fixed amount that can be determined by the tax payer.
In conclusion: the requirement to charge the inspection fee is unconstitutional because it does not take into account state activity, but the total allocated to the award distributed monthly (Article 32 of Law 13,756/2018). Another legal text will come to allow the citizen to be required to pay the inspection fee.
As a result, the government immediately loses around R$ 4.4 billion just with the grant to betting companies, according to a report on the BNL website on February 2, 2023. First, because it did not regulate the law in a timely manner. Second, for not having been accurate in establishing the triggering event for the inspection fee. Third, due to government negligence. The calculations indicated reach R$ 6.4 billion in loss of annual revenue. Worse: without any burden for the Public Power, except inspection.
It's a lot of waste and a lot of carelessness. Do what? It is the country of Lima Barreto's “Bruzundangas”.
Regis de Oliveira
Retired Professor of Financial Law at the University of São Paulo (USP), career judge and retired judge at the São Paulo Court of Justice and former federal deputy. Author of 15 books in the legal field. He was Secretary of Education of the municipality and deputy mayor of the capital of São Paulo. Twice elected federal deputy. He chaired the State, National and Latin American Association of Magistrates.
Source: Poder360
