Issue Number 7 – A Lottery May Lead to Higher Taxes

North Carolina Citizens for a Sound Economy today released Issue Number 7 of its ongoing effort to educate elected officials and citizens on why a government-run lottery is bad business and public policy.

A lack of revenue could lead to higher taxes.

Proponents always promise a lottery will either lead to more spending on education or lower taxes. They argue the increased revenues flowing into government will enable the state to do one, or both, of these popular proposals. Unfortunately research shows that neither of these promises is ever kept. A study by Money magazine revealed that state sponsored lotteries do not lead to more spending on education or to lower taxes.

If North Carolina adopts a lottery chances are taxes will increase. Why? The 1999 Lottery for Education Act mandates that 50 percent of revenue must be spent on infrastructure repairs and paying off bond debt. This means that if lottery revenues do not meet projected revenues the state may have to raise taxes in order to meet the needs created by new public works projects and to pay off bonds.

“I hope no one gets tricked into thinking a lottery will cause their taxes to go down,” said North Carolina CSE Director Jonathan Hill. “Just as we are facing a fiscal crisis now, if we gamble on a lottery you can count on it, it won’t be far down the road that the politicians when faced with another spending crisis will want to raise our taxes—Government just needs to get control of the spending.”