Holland Earns 400 Million Euros a Year from Cannabis Bars

State Earns 400 Million Euros a Year from Cannabis Bars
Netherlands Info Services News Bulletin

AMSTERDAM, 03/05/08 - The Dutch state earns 400 million euros annually in tax revenues from 'coffee shops,' as the Dutch cannabis cafes are called. Sales in the sector total around 2 billion euros, according to conservative estimates by TV programme Reporter.

Reporter calculates that the some 730 coffee shops in the Netherlands sell around 265,000 kilos of hashish and cannabis annually. The bulk of this is grown in the Netherlands. Although coffee-shop owners do not have to pay VAT, the tax service does calculate income tax at the highest rate of around 52 percent.

In fixing the tax rate, the tax service assumes that the selling price of grass is twice the purchasing price. In Amsterdam, where coffee shops often have non-price-conscious foreign tourists as customers, the taxman actually applies gross profit margins of 150 to 180 percent.

The finance ministry claimed in a reaction that it does not know how much tax the 730 coffee-shops pay. Tax inspectors who wish to remain anonymous suggest "they do not want to know about it in The Hague, as it is all much too politically sensitive," according to Reporter.

The report reveals that sales of hashish imported from abroad are much smaller than sales of home-grown grass. More cannabis is actually produced in the Netherlands than is consumed domestically. An estimated 60 percent of the cannabis is exported; no tax is levied on this.

"As export product, Dutch cannabis comes second or third after cucumbers and tomatoes. Germany and the United Kingdom are big customers," said police commissioner Max Daniel, responsible for combating the organised crime behind cannabis-growing.

Although police destroy 15 cannabis nurseries daily, the raids have no effect on the supply but only on the price of the cannabis. The growers want compensation for the bigger chance of being caught in the price they get for their grass. And the tax service benefits from this too, the reportage reveals.