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Former Minister: Govt trying to drive gaming operators out of Business

Former minister: Govt trying to drive gaming operators out of business

Michael Halkitis.

With the increase in taxes for the gaming industry, the government is giving the impression that it is either punishing the gaming houses or trying to drive them out of business, said former Minister of State for Finance Michael Halkitis.

“To impose such a massive increase, totally blindsided, I mean all of the operators saying they knew nothing about it until they heard it in Parliament, that’s not the way to operate,” Halkitis told The Nassau Guardian.

“The government has the right to impose taxes, but again, in my view, they have a responsibility to make sure what they do is reasonable and is justified.

“There is no reason why the government could not have sat down with the gaming operators and say to them, we want to increase the taxation, have a discussion and at the end of the day, even if you cannot come to a point where you are all in agreement, at least you can move somewhere down to some middle ground, or be able to come to some understanding.

“Yes, the government has the power to do whatever it wants to do but when you are talking about your actions and the potential impact on, in this case, thousands of people who work in the industry, not only the owners or the operators; you have people who work in the industry, you have people who provide services to the industry and so to have such a massive increase so sudden, where the operators are blindsided, it does not auger well.”

Last week, Deputy Prime Minister and Minister of Finance Peter Turnquest explained that gaming houses that make revenues up to $20 million will be taxed at a rate of 20 percent; those that make between $20 million and $40 million will be taxed at a rate of 25 percent; those that make between $40 million and $60 million at a rate of 30 percent; those making between $60 million and $80 million at a rate of 35 percent; those making between $80 million and $100 million at a rate of 40 percent; and the gaming houses bringing in more than $100 million at 50 percent.

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.

Following the announcement, the Bahamas Gaming Operators Association (BGOA) claimed the gaming houses are being targeted for racial reasons and said gaming house operators are being singled out because many of them are young, black and run efficient and profitable businesses.

In Parliament this week, Turnquest rejected that the proposed increase in taxes for gaming houses has anything to do with “racism, discrimination, any personal vendetta” or an intent to put gaming operators out of business.

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

Halkitis asserted that the government’s decision undermines the confidence of investors in the economy and brings a level of unpredictability.

“People are looking now, local and international investors are looking, at, ‘Well, you know I could be in one tax environment today but the minister of finance can go to Parliament tomorrow and totally upset the whole balance, so am I prepared to be in such an environment’,” Halkitis said.

“It brings a level of unpredictability because you are here today, you are existing, you might invest under certain circumstances, and I’m not talking just gaming, I’m talking anybody; you decide to go into a particular industry, you are operating, and then all of a sudden the minister can go to Parliament and with a stroke of the pen, totally change all of the dynamics.

“And, so, again, I believe it is unfair for the gaming operators to be so blindsided.

“When the administration that I was a part of legalized the gaming operations, there was long discussions back and forth of what is an appropriate level of taxation.

“The operators had to pay back taxes for the time that they were unregulated.

“They had to pay 11 percent of their gross or 25 percent of their earnings, which is significant.

“I understand people would say they have a particular impact, but the fact for me is they are regulated, legitimate businesses in this environment and they deserve to be treated with consideration when it comes to taxation.

“But, I guess the point is the government dropped this 60 percent VAT increase on the rest of us, so they didn’t see reason to consult with anybody anyway.”

The BGOA called on the government to provide evidence that The Bahamas gaming industry is undertaxed, and said the decision to introduce a sliding scale tax threatens the livelihoods of the more than 2,000 Bahamians employed throughout the sector.