Licensing and taxing both offline and online gambling creates an essential revenue stream for nations worldwide. The gambling industry in the Netherlands is presently under stringent regulation, with licenced operators in the nation being subject to a 29.5% gambling tax. A fresh proposal is now seeking a reform in the taxation structure for gambling operators in the country, pushing for a tax increase.
On Tuesday, MPs Silvio Erkens and Chris Stoffer introduced the proposal. This proposal comes in the wake of the Dutch government advocating for a sharp increase in the tax applicable for alcohol. The government recently suggested their intentions to increase the excise tax for alcoholic beverages, including wine and beer, by a staggering 16.3%
Despite the government’s plans, Erkens and Stoffer pointed out the potential harm stemming from such increases. They noted that this rise might seriously affect the economic stability of regions nearby the nation’s borders. The lawmakers explained that residents living in the border regions could attempt to evade the increased alcohol excise duty by purchasing the beverages from neighbouring countries.
Addressing the possible adverse effects from hiking the excise duty on alcohol, the MPs suggested a proposal to halve the proposed increase. This means the excise duty on alcohol would only rise by 8%. To offset the reduced tax revenue, Erkens and Stoffer proposed an increase in gambling tax.
Augmenting the Gambling Tax by 1%
The expected cost of the alcohol tax cut is around €74 million ($78.3 million). The MPs’ proposal aims to bridge the gap in revenue caused by the alcohol tax reduction by applying a 1% increase to the tax rate for gambling operators. This change would effectively raise the current tax rate of 29.5% to 30.5%.
In their proposal, Erkens and Stoffer shed light on the burgeoning popularity of online gambling activities. Ideally, they aimed only to increase the gambling tax for 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,”
said MPs Silvio Erkens and Chris Stoffer in their submitted proposal change
Currently, Dutch regulations do not distinguish between online gambling activities and land-based activities. Consequently, if the MPs’ proposal is approved, the tax increase would impact all gambling forms in the Netherlands. That would be unless further modifications and stipulations are implemented.
If the Dutch government agrees to the proposal and raises the tax by 1%, around an estimated €26 million ($27.5 million) in tax revenue is expected to be produced. The proposed change also advocates for an increase in the excise duty on tobacco, in addition to the gambling tax.
