Groundbreaking news is coming out of the Netherlands which could go a long way beyond the online poker world into the parameters of the federal government’s powers of taxation.
On Tuesday September 9, the Dutch Senate passed a hotly contested bill which establishes a national tax on games of chance of 40.85%. The bill is finding controversy due to its “blind” taxation of all games of chance, regardless of whether or not they are deemed to be legal in the Netherlands. In sum, the Dutch Senate has passed a bill which will apply a 40.85% tax on any Dutch gaming, legal or otherwise.
Proponents of the bill pointed out three major reasons to include illegal gaming operations under the 40.85% blanket tax:
- Secretary of State De Jager argued that it is not the role of taxation laws to address legality, but to promote fiscal equality through blind tariffs.
- Christian Democratic Party Senator Essers noted that the new law was only an amendment to the Betting and Gaming Act which had already opened the door for taxing rather than prosecuting illegal gaming entities. It was noted in the September 9 session that such prosecutions would be time consuming and would only serve to divert the Court’s attention from more pressing issues than online gaming.
- And in what is perhaps the most telling pair of statements to emerge from the proceedings, while Labor Party Senator Leijnse suggested that his main concern was to stonewall American online gaming providers from dominating the rapidly growing online Dutch scene, the Senate itself maintained that the ultimate purpose of the bill was to protect the Dutch public by making sure that “illegal online gaming is not given an advantage over gaming in the real world.”
The bill was virulently opposed by the more liberal members of the Senate, most notably Socialist Party Senator Reuten. The opposition voiced fear that while the taxation of illegal gaming entities may not have drastic consequences, the precedent set by establishing mandatory taxes on illegal activities could provide the federal government a standing invitation to abuse its power of taxation. In addition, opponents suggested that taxing illegal activities rather than prosecuting them is a tacit sort of legislative approval, almost a pseudo legalization of such activities.
For its part, the Dutch government is emphasizing that the principle of fiscal neutrality does not supersede the principles of criminal culpability and that when possible, these now taxed gaming entities will face stiff legal penalties.
This was the second occasion in 2008 that the Dutch Senate convened to address online gaming. In April of this year, the Senate rejected the Dutch Betting and Gaming Act which would have provided an exclusive online gaming license to Holland Casino, which is for more than 30 years now the only government-licensed casino in the Netherlands.
