It has often been said that a country cannot tax its way out of a recession. The Bulgarian Government is about to test out that received wisdom in the realm of gambling taxation.
Gambling taxation in the country currently stands at 10 percent but the government intends to raise this rate to 12 percent.
Local industry lobbyists have been hard at work in an attempt to convince the government that this is not a great idea. They argue that casinos have already had a rough time and because of this raising of the tax rate that many people stand to lose their jobs.
This is a pretty standard economic argument based on the idea that there comes a point where raising tax rates causes economic stagnation and the higher rate of tax finishes up being drawn from a much smaller base. This usually causes the net revenue to government to actually fall rather than rise as a direct result of the higher rate.
The Bulgarian casino industry has already been under severe pressure as a result of local considerations and more pertinently the global economic downturn. Whether it can withstand this tax rate rise remains to be seen but for now the government seems determined to press ahead with it.
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