Online casino tax cut fails to deliver promised revenue

Estonia’s cut to the tax on online casinos has not brought the promised extra revenue, raising concerns about funding for cultural projects, ERR reports. The Cultural Endowment of Estonia warns that lower-than-expected tax income could delay payments and increase borrowing costs.

The tax cut was intended to attract online gambling companies to Estonia and increase revenue for culture and sport. A scenario used to support the change projected that online casino tax revenue would reach 95 million euros by 2029. But the Finance Ministry says only two new licence applications have been received: one is being processed and the other was rejected.

The Cultural Endowment is preparing a budget for next year that will be 6 million to 7 million euros lower than had been expected a couple of years ago. Its director, Margus Allikmaa, said most of the shortfall would come from reduced gambling tax revenue, including the lower tax rates.

The endowment helps fund ERR’s new television building, the Tartu city-centre cultural centre and Tallinn’s film city. Lower tax receipts could delay its payments and force more borrowing, increasing interest costs. ERR chief executive Erik Roose said that spending more on interest could leave 2 million to 3 million euros less for new television equipment, meaning the broadcaster might have to bring some older equipment to its new building.

The law provides for further cuts to the online casino tax, which is due to reach 4% in 2029. Allikmaa has called for the cuts to be stopped as soon as possible.

Finance Minister Jürgen Ligi called the tax cut bad policy but said the government would not reverse Parliament’s decision. He said tax policy should be predictable, with at least six months’ notice before tax increases or a decision to stop lowering taxes.