When lottery becomes a tool of the tax policy
Prague, December 14, 2016 - Information about the so-called Proof of Purchase Lottery which is currently in making and will eventually become a part of the e-record keeping of sales (Czech abb. EET) seemed a somewhat controversial item on the agenda of today’s Government Meeting.
The Czech Chamber of Commerce has no objection to the existence of lotteries and other games that involve gambling. After all it is a regular, though strictly regulated segment of the economy and the representatives of this industry are base-members of the Chamber.
Although the planned Proof of Purchase Lottery is not formally part of the new general regulation which will be exercised on the gambling industry after January 1, 2017, the state’s involvement in any market always draws attention and calls for caution. This is due to the fact, that to a certain extent the state will undoubtedly compete with the private sector of the lottery businesses. In addition, it exposes the state to moral accountability. It cannot be ignored that the state on one hand enforces strict regulations of a specific industry due to potential societal problems that stem from it, but which on the other hand do not prevent the state from making a profit from that same industry.
This issue is built into the architecture of Proof of Purchase Lottery. For one thing, it is aiming at a consumer who wants to gamble, although we do not share in the opinion that Proof of Purchase Lottery would become the incubator for addicted gamblers. At the same time, it is to become subject to tax monitoring to discourage entrepreneurs from possible tax evasion.
Already in the early stages of planning how the lottery may be used in the state marketing of EET, the Czech Chamber of Commerce proposed that far more logical would be to have a lottery aimed at retailers of goods or services who receive payments in cash. That would create positive incentives to voluntarily fulfill registration and taxation responsibilities in general - leaving aside any discussion of content and extent thereof – and run a lottery of registered revenue that would give winning entrepreneurs a bonus in the form of reduced income tax.
The entrepreneur could claim the said tax break against any future tax payment. This type of competition for tax credit among businesses themselves would not be tied to gambling addiction or carry a repressive subtext. In addition, it would not be necessary to organize more-or-less complex payouts from the state budget. Unfortunately, the ministry and the government chose a different path.
Ladislav Minčič, Director of the Department of Legislation, Law an Analysis for the Czech Republic Chamber of Commerce.