The gambling industry in Italy is under fire again as the Italian government proposed more tax hikes on the industry. This time, instead of the operators bearing more taxes, it will be the customers who will have to carry the burden.
The new tax proposal is part of the 2020 fiscal budget and comes with various increased tax rates on winnings. The big one is the increased tax rate on lottery jackpots above €100 million. The current tax rate of 12 percent has been nearly doubled to 23 percent.
However, this isn’t a big concern as such jackpots take place occasionally. The real worry is that the government plans to place a new 12 percent tax on gamblers’ winnings under €500.
This will be a big hit for the many small bettors out there who currently don’t have to pay any taxes. The tax changes are not just for lotteries either. It covers every wager type, with a variety of rates that go higher as the winnings become bigger. The maximum tax amount that will be imposed is 23 percent.
The sudden increase in tax rates will make it easier for the government to bring in a lot more money in the coming fiscal. However, gambling analysts disagree and state that this move could very well backfire and cause the government to actually take in lower earnings based on how gamblers operate.
A favorite example is that when a lottery player pays €5 for a ticket and wins back €5, they will usually use the money to buy another ticket. With the new tax, they will only get €4.40 in return. They will end up paying an additional €0.60 if they want to buy a new lottery ticket. This could discourage Italians from spending more on gambling related activities and in turn impact the state’s tax collections.
The government does not seem very concerned with this as they claim that the new tax rates are not designed to bring in more revenue but to discourage citizens from spending more on gambling related activities.
Crackdown On Gambling Industry
The government has taken a strict stance against gambling by not only imposing higher taxes but other restrictions as well There is also a ban on gambling advertisements which is in line with the government’s goal to reduce gambling activity in the country.
Another move that will definitely hurt gambling operators is the ban on cash payments. This move is supposed to stop tax evasion as players will be forced to use credit and debit cards, which means there will always be a record of all gambling transactions. This move has already raised the ire of local gambling experts as they point out that it will kill small gambling wagers and only benefit banks.