Taxation of retail and online gambling provides a vital stream of revenue for countries across the globe. Currently, there are strict rules regulating the gambling sector in the Netherlands and licensed operators in the country are subject to a 29.5% gambling tax. Now, a new proposal seeks to change the taxation of gambling for operators in the country, calling for an increase.
The proposal was submitted Tuesday by MPs Silvio Erkens and Chris Stoffer and it comes at a time when the Dutch government proposed a drastic increase in the levy applicable for alcohol. The government recently hinted at plans for increasing the excise duty applicable for alcoholic beverages, such as wine, beer and others, by 16.3%.
However, Erkens and Stoffer identified the potential negative impact of such an increase, claiming that it may have a significant economic impact on regions near the country’s borders. The duo outlined that people living in such regions may try to avoid the higher excise duty on alcoholic beverages by buying them from countries nearby.
To cushion the potential negative impact, of an increase in the excise duty on alcohol, the MPs submitted a proposal that calls for the increase to be in half. This would otherwise mean that the excise duty on alcohol would be increased by only 8% and to compensate for the tax revenue, Stoffer and Erkens called for an increase in gambling tax.
Increasing the Gambling Tax by 1%
Introducing half of the excise duty on alcohol is estimated to cost approximately €74 million ($78.3 million) in tax revenue. Within their proposal, the two MPs sought to fill in the gap created by the decrease in the revenue from alcohol by implementing a 1% increase in the tax rate applicable to gambling operators. This would effectively increase the tax rate from 29.5% to 30.5%.
In their proposal, Erkens and Stoffer highlighted the recent increase in the popularity of online gambling activities. Ideally, the duo sought to only increase the gambling tax applicable to online gambling operators.
“Ideally, the increase in the gambling tax would only have resulted in a heavier taxation of online gambling. However, the gambling tax is currently not differentiated with regard to different forms of gambling, which means that an increase cannot yet be focused on this group,“
reads the proposed change submitted by MPs Silvio Erkens and Chris Stoffer
However, under the existing regulations, there’s no separation between online gambling activities and land-based activities. In other words, if the proposal of the two MPs is implemented, the increase would apply to all forms of gambling in the Netherlands. This would be the case unless further changes and provisions are implemented.
If the Dutch government implements the change and increases the tax by 1%, an estimated €26 million ($27.5 million) in tax revenue is expected to be generated. The duo’s proposal also calls for an increase in the excise duty on tobacco as well, in addition to the gambling tax.