The Czech Republic’s Ministry of Finance has confirmed that it will increase the tax rate on certain gambling activities in the country from January 2020.
At present, the tax rate for gambling is set at 23% of gross gaming revenue (GGR) with the exception of gaming machines, which are taxed at 35% of GGR.
However, the new structure will now see taxes split into three levels, according to how harmful the government perceives the activity to be. This is in line with the draft gambling tax act published in 2015.
From January 1, 2020, lotteries, live games and bingo operators will be taxed at 30%, up from the current rate of 23%. The rate for fixed odds betting will also rise from 23% to 25%.
The Ministry of Finance said that some of the additional funds from higher taxes will be used to support problem gambling initiatives in the Czech Republic.
The changes are the result of a long-running campaign by the Czech Ministry of Health and the National Drug Policy Coordinator, calling to address the increase in availability of addictive substances and services.
As part of this, the Ministry of Finance is also proposing changes to taxes on both alcohol and tobacco. These include a 40% increase in excise duty on 0.5 litres of spirits, as well as a rise in excise duty on cigarettes from 27% to 30%.
“Our country has made considerable progress in the field of combating addiction in recent years… but expert figures show that we must remain active,” Finance Minister, Alena Schillerová, said.
“The increase in excise duties lowers the availability of addictive substances and also enables them to raise funds to support prevention projects.”
Czech Health Minister, Adam Vojtěch, added: “Higher taxes can not only increase revenue, but also motivate consumers to reduce consumption, thereby reducing related health problems.”
The planned tax increases, which were first unveiled last month, attracted heavy criticsm from some quarters, including Miroslav Kalousek, the former leader of the KDU-CSL and TOP 09 parties who has twice served as the government’s Finance Minister.
Jan Volny, the vice-chairman of the ANO 2011 political party, also said the rise to 30% could be counter-productive in collecting taxes, while Jan Bartošek, a member of the Chamber of Deputies for the Christian and Democratic Union party, said an increase in tax rates could “lead to an increase in illegal gambling”.
Image: Sébastien Avenet