In Estonia, opposition is mounting at the Riigikogu against the budget proposals to lower taxes on gambling income by 2028, an economic mandate supported by the liberal coalition of the Reform Party and Eesti 200. 

Earlier in June, the Reform Party and partner Eesti 200 announced they will be reviewing the country’s gambling framework as part of a wider strategy to revitalise foreign investment in sports, IT and technology sectors. 

The plan is to reduce the annual tax rate  on gambling income by 0.5% until 2028 which would bring the cap from the current 6% down to 4%. The proposal carries strategic significance as the tax rate would be Malta’s 5% – a move that coalition ministers support as a long-term initiative to relocate investment in igaming ventures to Estonia.

The mandate carries the ‘cautious support’ of Prime Minister Kaja Kallas, who approved of the economic plan for igaming taxes with a view to help fund a new Olympics programme for Estonian athletes and the building of a national stadium in Tallinn. 

However as deliberations have commenced, scepticism about the intended consequences remains amid not only opposition leaders, but also the Finance Ministry.

Highlighting what needs to happen in order for the reduction to bear fruit, Evelyn Liivamägi, Deputy Secretary General of Estonia’s Ministry of Finance, said: “In our assessment, tax revenues are more likely to decline. 

“To collect as much as currently forecast in the state budget strategy, at least 10 new operators would need to enter the market each year and pay as much tax as the average gambling organiser has been doing so far.”

In an initial review of potential gambling tax reductions, the Ministry of Finance stated that approval could only be granted following a more thorough assessment of the associated economic risks and anti-money laundering exposures.

Tensions were also fueled by the fact that the bill to lower taxes passed first reading in Parliament earlier this week, blocking a planned increase to 7% next year.

Both Eesti 200 and Reform have stood behind their plans, however, with MP Tanel Tein/Eesti 200 doubling down in a recent comment: “If we hike the tax further, remote gambling operators may leave the Estonian market, which means our current state budget forecast could decrease. 

“Many things might go undone, and within two years we’d just return to the same level where Estonia has always been — around five percent. We’re moving toward four percent as a signal to the sector that Estonia is once again worth considering”.

Opposition ministers have urged Prime Minister Kaja Kallas to review the terms of the Reform–Eesti 200 economic pact (2023–2028).The liberal coalition’s ambitious programme aims to position Estonia as a regional leader in cybersecurity and defence, while pursuing its overarching goal of becoming the first net-neutral nation in the Baltics.