Dr. Jahić: It is not good that betting shops in Zenica are taxed in advance

Gambling operators oppose the decision of the local authorities in Zenica, which recently imposed new annual taxes for betting shops in this city, in the amount of 30,000 to 50,000 KM per each betting point.

Such a thing, according to gambling operators, is discriminatory, contrary to the laws of FBiH, but also threatens the complete closure of more than 100 betting points in Zenica where about 200 workers are employed. 'Betting shops cannot withstand such burdens'. 'Out of a desire to increase the city budget, it will lead to its reduction'.

Lutrija BiH has already closed its branches in Zenica at the beginning of 2017. They stated that their business in this city would no longer be economically viable.

The Mayor of Zenica, Fuad Kasumović, proposed an increase in annual taxes for betting shops, from 2,500 KM to 30,000 to 50,000 KM per betting point, depending on the location of the betting shop. Those closer to the center will pay more. The money collected in this way, Kasumović said, will be used by the local authorities to finance sports clubs.

The City Council supported the mayor's proposal by a majority of votes. The new Decision on Municipal Taxes in Zenica will enter into force after its publication in the Official Gazette.

The proposal to amend the Decision on Municipal Taxes in Zenica initially stated that the new Decision provides for additional taxation for certain types of activities, among which betting shops were included. In addition to betting shops, the proposal is to further tax night bars and discotheques, telecommunication, telephone, and satellite services, electricity production and distribution.
Experts immediately warned that such a decision would be discriminatory. Taxing only one type of activity is not legal, neither in BiH nor anywhere else. This is also the opinion of the Constitutional Court of FBiH. There are already several rulings by the Court that have declared taxation by type of activity unconstitutional, such as the case in Travnik...

Mayor Kasumović abandoned the original idea and proposed a new Decision on Municipal Taxes in Zenica. The new Decision, adopted at the end of December last year, states that municipal taxes in Zenica will be charged according to the criterion of activity accumulation. Simply put, those who generate higher income will pay higher taxes. Betting shops explain that even the amended Decision has not brought any changes for them. It is a play on words. This decision also stipulates that betting shops pay between 30,000 and 50,000 KM annually to the city budget of Zenica, per betting point.

Professor from the Faculty of Economics in Sarajevo, Dr. Mehmed Jahić, shares the opinion of gambling operators. He believes the problem has been approached superficially. He is sure that with the new municipal taxes, there will be no increase in money in the Zenica budget. He also believes that the situation is such that it threatens the reduction or even complete closure of betting shops.

- It is senseless to talk about taxing accumulated profit if we do not know what that profit will be at the end of the year. No one can guarantee betting shops how much profit they will have during 12 months. Therefore, you cannot take tax from them in advance. Let's set things up hypothetically. What if you tax one location with 50,000 KM, and in that year, there are 90 percent winnings in that betting shop? That betting point would have to be closed - says Prof. Dr. Mehmed Jahić.

He adds:

- Or, what if a highly taxed betting point has unforeseen costs in terms of robbery, damage to inventory, etc. Will the City return the tax taken in advance to the betting shop? These are all things that should be considered when making such decisions - believes Dr. Jahić.

For him, taxing in advance based on the accumulation of activity, especially for sales points in certain streets or city zones, is generally an incorrect move. He is of the opinion that only a complete company, throughout the entire country, can be taxed in this way at the end of the year, and again, only the state can do it, and certainly not the local community.

- It is unfair, discriminatory to tax some sales points in a certain street and not tax others. You cannot arbitrarily say that betting shops are a highly accumulative activity and tax them, while leaving, for example, the sale of cigarettes or alcohol in the same street untaxed. The fact that someone wears an expensive suit does not mean they have money - says Professor Jahić.