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Association wants govt to use expert to determine appropriate tax

Minister ‘comparing apples to potatoes’

Peter Turnquest. 

The Bahamas Gaming Operators Association (BGOA) yesterday called on the government to provide evidence that The Bahamas gaming industry is undertaxed, and accused Minister of Finance Peter Turnquest of being misinformed regarding the technicalities of the gaming industry.

The association said Turnquest is comparing apples to potatoes in drawing comparisons between web shop gaming in The Bahamas and other forms of gaming in other jurisdictions.

It repeated that the decision to introduce a sliding scale threatens the livelihoods of the more than 2,000 Bahamians employed throughout the sector.

The association said the government should seek a gaming and tax expert to ensure the most informed decision is made and “everyday Bahamians don’t suffer due to misinformed calculations and wrongful comparisons”.

The group also questioned why the government would suggest the gaming culture in the Family Islands is sucking revenue out of those economies and transferring it to the capital, without sharing empirical evidence.

“Why isn’t this same concern shared for the over 2,000 Bahamians employed by gaming operators nationwide?” the BGOA asked.

“If this government is going to make such fundamental structural changes to this or any other industry, then there is a legitimate expectation that they use only empirical data from independent experts and that these changes are made through a proper consultative, collaborative process.”

Turnquest announced the sliding scale of rates to be applied on taxable revenue last week.

He said the increase has to do with “equity”.

The sliding scale will result in gaming houses that make revenue up to $20 million being taxed at a rate of 20 percent.

Meanwhile, those that bring in more than $100 million will be taxed at a rate of 50 percent.

According to the government, only the portion of revenue that falls within the tax bracket will be taxed at the new rate.

The government has also proposed taxing gaming patrons through a five percent stamp tax applied on deposits and any non-online games or digital sales.

The association claimed the gaming houses are being targeted for racial reasons, a claim the government has rebuked.

In a document called “Domestic Gaming Overview”, the government acknowledged that gaming houses have brought “valuable innovation and job creation”.

However, it said the original flat tax rate of 11 percent was undervalued compared to global standards.

The government said its policy is consistent with international standards, adding that domestic gaming industries should provide a greater return to the state, while still permitting a fair return to the licensed operator.

The government said in Florida, 78 percent of taxable revenue is paid to the state as a gaming tax.

It said in Barbados, players pay 17.5 percent VAT (value-added tax) while operators pay a 25 percent corporate income tax.

It also used Jamaica as an example, where gaming houses are taxed up to 20 percent of gross profits, in addition to a five percent sales tax on all ticket sales, and a 20 percent tax on all lottery winnings over $150.

The government continued that in the United Kingdom, 78 percent of taxable revenue is either paid to the state or donated to registered and approved charities or causes.

According to the document, in Macao, the “gambling capital of the world”, 39 percent, regardless of the size of the operation, is taxed, inclusive of a flat gaming tax rate of 35 percent; 1.6 percent tax for a special fund for education, and another 2.4 percent for government initiatives in the areas of urban development, tourism development and social security.

The association said the dynamics of the gaming market in The Bahamas are vastly different to other countries.

The association claimed the proposed tax structure has “vast implications” on the Bahamians economy, including expanding the unregulated black market.

“We are confused by the minister’s example given that the jurisdictions he has listed are not comparable to our own,” the BGOA said.

“…Macao’s gaming industry is comprised of land-based casinos and horse racing, while the Bahamian industry is comprised of online gaming.

“All gaming taxes in Macao are from land-based casino operations, similar to Atlantis or Baha Mar.

“Florida does not authorize, manage or regulate any online gaming in the state; and in Barbados online/interactive gaming companies do not exist.

“Our taxes are actually in line with the 15 percent tax rate for online gaming in the United Kingdom.

“None of these industries are the fourth largest employer in their jurisdiction. The minister is comparing apples and potatoes.”

The association stressed that gaming house operators are not opposed to being taxed, but insisted decisions must be evidence-based.

According to the government, there are seven gaming houses; 269 locations on 13 islands.

More than 2,750 people are employed by these businesses, according to the government.

The overview document notes the industry generates $194 million in taxable revenue.