Czech Ministry of Finance defends gambling tax hike

30 October 2019

The Czech Republic Ministry of Finance has defended its decision to introduce higher taxes on certain gambling activities, after a national newspaper claimed the increases would harm the country's land-based market.

The Ministry said income from the higher taxes will help support its efforts to protect people from gambling-related harm.

From January 2020, a new structure will split taxes into three tiers, according to how harmful the government perceives the activity to be. Gambling tax is currently set at 23% of gross gaming revenue (GGR,) with the exception of gaming machines, which are taxed at 35% of GGR.

Lotteries, live games and bingo operators will be taxed at 30% of GGR, up from the current rate of 23%, while the rate for fixed odds betting will rise from 23% to 25%. The Ministry said some of the additional funds from higher taxes will be used to support nationwide problem gambling initiatives.

However, Czech newspaper E15 has hit out at the plans, saying that opposition parties, as well as the members of coalition government comprising the Czech Social Democratic Party and ANO 2011, are opposed to the move.

Jiří Dolejš, a member of the parliamentary budget committee for the Communist Party of Bohemia and Moravia (KSČM), said the government should reconsider the decision before implementing the new regulations.

Dolejš put forward an alternative proposal whereby the rates for lotteries, live games, bingo and fixed odds betting would remain the same, but the tax rate on gaming machines would be increased from 35% to 38%.

He added that the government should be focused on tackling online gambling, claiming the channel was more risky than certain forms of land-based gambling.

“The main intention is to raise taxes for slot machine operators, which are the most harmful,” he said. “The point is to reasonably maintain different rates of gambling taxation according to social risk, but the Ministry of Finance was not interested in this debate.”

However, the Ministry hit back at the claims, saying that the new rates are set to build on the success of the Gambling Act of 2016. In first month after the act's introduction, it said, 90% of illegal online gambling disappeared from the Czech market.

The Ministry also noted that it will launch a new exclusion system next year as an additional form of protection for problem gamblers. This will include information of people who are claiming benefits, bankrupt, subject of a court order, have been ordered to seek treatment of addiction, as well as those that have self-excluded.

“We consider the argument used in the article, that the 2019 tax package does not address online gambling in any way, misunderstands the basic ambitions of the Tax Act,” the Ministry said.

Image: Nicolas Raymond