zech Finance Minister Alena Schillerová announced last week that the country will be hiking taxes on gambling operators, set to come into effect from January 1, 2020. “The government has just approved a long-awaited Tariff package for tobacco, hard alcohol, and gambling taxation by the Ministry of Health and the National Drug Coordinator. It responds to the increase in their availability as a result of rising living standards in the Czech Republic,” she said on Twitter.
The changes are a response to recommendations going back several years from the Healthy Ministry and also from international bodies like the World Health Organisation (WHO) and the Organisation for Economic Co-operation and Development (OECD). They aim to bring the taxation of vice products into line with recent changes in the Czech economy. For example, while the average wage increased by around 50% between 2009 and 2018, taxation of alcohol was last adjusted in 2010.
Schillerová explained the logic behind the changes: “Our country has made considerable progress in combating addiction in recent years. We all remember the weed-filled housing estate or the smoky restaurants and public areas. Even in 2012, there were an incredible 75,000 vending machines in our country, and 7,500 gaming rooms, and cigarette smoke accompanied us at every turn. Measures that have significantly eliminated these negative phenomena are returning us to the civilized world, but expert figures show that we must remain active. The increase in excise duties not only reduces the availability of addictive substances, but also raises funds to support prevention projects.”
Concerning gambling, the new proposed tax structure will see taxes split into three levels, will determine new tax rates based upon the potential risk factor of each activity. The Treasury proposes raising the rate from 23% to 25% for a partial tax on odds betting, totalizator games, raffles and small-scale tournaments, and from 23% to 30% for lotteries, bing and live games. They will also make several other smaller changes to the taxation and regulation of other types of gambling games, according to BRNO Daily.
The changes should raise about CZK 10 billion a year for 2020 and 2021. However, the plans have met with some opposition; the Civic Democratic Party (ODS) supports the rises in tax on cigarettes and alcohol, but argues that other taxes should be reduced at the same time, and TOP 09 disagrees with the tax increases altogether. Both parties accused the government of trying to get more revenue from taxpayers because it is running out of money. In addition, trade bodies representing bookmakers and producers of tobacco and spirits argued that tax increases will lead to expansion of the black market and price increases.
As a result of a long-running campaign spearheaded by the Czech Ministry of Health and National Drug Policy Coordinator, the additional funds generated due to higher taxes will be used to support problem gambling initiatives across the country.