Czech Republic Ministry of Finance defends its decision to increase taxes

The Czech Republic Ministry of Finance has been found to defend its decision to introduce an increase in taxes on specific gambling activities. This has followed a national newspaper claiming the increases would harm the country’s land-based market.

The Ministry said that the income from the higher taxes will help support its efforts which have been put in place in order to protect people from gambling-related harm.

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

Lotterties, live games and bingo operators all now be taxed at 30 per cent of GGR. This is an increase from the current rate of 23 per cent, while the rate for fixed odds betting will be rising from 23 per cent to 25 per cent. The Ministry said some of the additional funds from higher taxes will be used to support nationwide problem gambling initiatives.

However, it has been seen in the Czech newspaper E15, that they have hit out at the plans, where they have said that the opposition parties, as well as the members of the coalition government compromising 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), has said that 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 per cent to 38 per cent.

He also added that the government should be focusing on tackling online gambling, where he’s claimed that the channel was more risky than certain forms of land-based gambling.

He said added: “The main intention is to raise taxes for slot machine operators, which are the most harmful. 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 then hit back at the claims, where they said 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 per cent 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.

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