The drafters of the bill, Reform and Eesti 200, say cutting the gambling tax will encourage more firms in the sector to move to Tallinn and Estonia, boosting tax revenues in the process.

Andrei Korobeinik (Center), deputy chair of the Riigikogu's Finance Committee, called it cynical to discuss tax cuts for foreign companies at a time when taxes are rising for the domestic population.

"Looking at the overall picture, Estonia is currently competitive in terms of this tax rate. Investors, regardless of the sector, tend to look at whether the environment is stable and attractive for investment, and recent years' policies have certainly not encouraged that," Korobeinik said.

This would mean tax revenues may not increase with the introduction of the tax.

From among non-political stakeholders, Evelyn Liivamägi, deputy secretary general at the Ministry of Finance, also thought not only would the change boost tax revenues, but would even serve to reduce them.

"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 organizer has been doing so far," Liivamägi said.

Liivamägi also pointed to the additional burden the tax change will bring.

"Alongside this tax rate reduction bill, there is also an amendment to the Gambling Act under progress at the Riigikogu, which will strengthen the oversight of gambling operators," Liivamägi said. The tax change will therefore bring additional work for the Tax and Customs Board (EMTA) and the Financial Intelligence Unit.

On Tuesday, the Riigikogu passed the first reading of the Gambling Tax Act amendment, which aims to reverse next year's planned gambling tax increase to 7 percent and instead lower it in increments. By 2029, the rate would drop from 6 percent to 4 percent, under the terms of the bill.

The rationale is to attract more remote gambling operators to Estonia through the concession, with the tax revenue rise forecast by the bill's proponents being used to fund culture and sports.

"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," said MP Tanel Tein (Eesti 200), who also sits on the finance committee.

According to the finance ministry's own risk assessment, online gambling is one of the biggest money-laundering risk areas, at a time when money laundering as a whole is on the rise.

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