Online gaming tax | Political bias in policy making

The July 11 decision by the GST Council to impose a 28 percent tax on full face value of bets at online gaming platforms equates gaming with the gambling industry.

In the case of the online gaming policy, there has been poor thought process and inconsistency, which creates uncertainty for investors and undermines the long-term goals of Digital India. This shows that the political influence over policy making, particularly when it comes to issues such as online gaming, has the potential for stigmatisation and marginalisation of certain industries.

The imposition of taxes can often viewed as a tactic to win favour with certain voter demographics, while simultaneously labelling gaming as a sin-ridden and addiction-prone domain. It is necessary for modern day policy makers and political leaders to rise above these short-term considerations and consider the behavioural patterns of 21st-century youth, the impact of technological advances, and the necessity for continuous policy adaptation.

Throughout human history, societies have evolved, driven by technological advancements and sociological developments. Each generation brings forth its own set of values, preferences, and behaviours, which demand careful consideration from policy makers. The rise of the digital age and the proliferation of technology have significantly altered the way younger generations interact, learn, and entertain themselves. Gaming has become an integral part of their lives, transcending traditional notions of recreation, and evolving into a multifaceted platform with various positive applications.

It is crucial to recognise that high taxation alone is not a comprehensive solution to the challenges associated with online gaming. The implementation of high tax rates conveys a negative perception of online gaming, potentially catering to conservative sentiments. However, this approach could have unintended consequences, such as driving Indian gamers to explore international platforms with more favourable tax environments or operating in regulatory grey areas.

Gaming has expanded far beyond gambling and now encompasses a diverse range of activities. It has transformed into a versatile platform with various positive uses. Gaming incorporates elements of education, recreation, and skill development, which aid in personal growth and progress. By utilising gamification techniques, gaming improves educational experiences, can help financial literacy efforts, promote citizen engagement in e-governance initiatives, and offer much more. The Indian gaming industry holds the potential to establish India as a frontrunner in this field, aligns with the goal of advancing Digital India, embracing technology-driven innovation, and bolstering the country's digital economy.

Technological advancements have the power to shape societies and economies in profound ways. When policies are developed without a comprehensive understanding of the behavioural patterns and aspirations of the 21st-century youth, there is a risk of disconnect between policy objectives and societal realities. Judging the younger generation’s interests and demands through the lens of previous generational aspects of society can hinder their development and limit their potential. It is important for policy makers to engage with and listen to the voices of the younger generation to ensure that policies reflect their needs, aspirations, and the realities of the digital age.

Instead, policy makers could have focussed in promoting responsible gaming practices through regulatory frameworks, public awareness campaigns, and educational initiatives. Effective age verification mechanisms, clear labelling, parental controls, and time management features can empower gamers to make responsible choices. Such measures can help safeguard vulnerable individuals while preserving the positive aspects of gaming.

High GST rates alone do not effectively deter addictive behaviours, as seen with smoking or drinking habits. Higher taxes can discourage growth and innovation within the industry, leading to reduced investments, limited access to quality gaming content, flight of entrepreneurs and the emergence of an unregulated underground market. This could exacerbate trust gaps and hinder responsible gaming practices, which is not the intended objective of policy makers. Balancing economic development with effective policy measures that protect gamers while promoting growth and innovation is crucial.

Societies are not stagnant entities; they evolve and change with each passing generation. Policy making in the 21st century requires a different approach that considers the social costs and implications of decisions. Judgemental policies and the politicisation of what the younger generation wants, based on the lens of previous generational aspects, can lead to wrong outcomes. When policy makers fail to understand the pace and potential of technological developments, they risk hindering progress and innovation. Only by embracing progressive policies that foster growth, innovation, and responsible growth, can the policy makers bridge the gap between short-term political considerations and long-term societal progress.

(Srinath Sridharan is an author, policy researcher and corporate adviser. Twitter: @ssmumbai.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.