Italian Government Plans Gambling Tax Increase in Order to Secure 2020 Budget

The Italian government has proposed a new so-called maxi tax on big winnings on lottery games. The goal is to inject 2020 budget with additional funds. This was reported by numerous media outlets in this country after the first look at next year's budget.

It has been suggested by lawmakers that all those who win big lottery jackpots – which is to say, EUR 100 million or more, will need to pay a 23% tax on winnings. Currently, the tax stands at 12%.

The Jackpot That Changed it All

This idea apparently gained momentum after an anonymous player won a EUR 209 million jackpot by choosing the right six numbers in SuperEnalotto which is a popular local game by major Italian operator Sisal.

In case of this player, if the 23% tax was effective right now, he would have to give away EUR 40 million of the total amount won. The said 48 million would be sent to state budget. As it stands, the winner will have to play a little over EUR 12 million, which is much more agreeable.

Italy was facing issues in attempts to meet European Commission goals in regards to reducing their deficits. So the budget-making also involved adopting new gambling tax provisions in 2018, and the Parliament approved a budget that included increased tax on online gaming and online sports betting.

Will Small Wins be Taxed Too?

From January 1st 2018, online casino operators in Italy need to pay a 25% tax on GGR (this was increased from 20%), while online sports betting operators need to pay 24% (up from 22%). Retail betting taxes rose from 18% too 20%.

The financial experts claim that this new tax increase should create additional EUR 80 million in gambling taxes.

However, that may not be the end of it...

..because some media speculates that there is also an increase of small wins tax in the cards. Any wins under EUR 500 come free of taxes – but even those could be prone to taxation from 2020 on.

Namely, there could be a 12% tax on winnings smaller than EUR 500. This would apply to all types of winnings collected by gamblers in Italy, not just lottery.

In fact, the government plans to grow rates on gambling winnings gradually and progressively until they all reach 23%.

A Strong Backlash Follows

Of course, such harsh measures have already provoked criticism and strong reaction...

...with some critics saying that this will only lead to decrease in annual profits for the lottery. Data suggests that on a yearly level, circa EUR 100 million is played on lottery games in Italy. Out of that, EUR 80 million are replayed winnings, while only EUR 20 million effectively leaves gamblers' wallets.

This means that, if a player wins EUR 5 from a scratchcard game, the will likely invest that money in another game of scratchcards. That win decreases to EUR 4.4 with the 12% tax and a player is more likely to collect winnings than spending EUR 0.6 to buy another scratchcard.

This is also applicable to sports betting. Because of higher taxes, these replayed winning could significantly dwindle and lotteries and other games would lose money.

Source:

“Italy Mulls Gambling Winnings Tax Hike to Boost 2020 Budget”, casinonewsdaily.com, October 14th 2019