Minister of State for Legal Affairs Elsworth Johnson said yesterday the government’s decision to increase taxes on gaming house operators offsets the social costs associated with gambling addiction.
During the budget debate in the House of Assembly, Johnson also maintained the government’s principle argument that the pending sliding scale of taxes is in line with international standards.
“[Web shop owners] have built an industry,” Johnson said. “We’ve decided to legalize it and in some respects they should be commended. But, Mr. Speaker, I think that as in all things, we have to tax the industry in a way that would bring equity to some of the social downfalls of that industry. And, how do we pay for it?”
During the budget debate, ministers have tried to make a case for the tax increase on the sector, despite the possible loss of 2,000 jobs, as foreshadowed by gaming house operators.
Minister of Finance Peter Turnquest announced the sliding scale to be applied on taxable revenue during his budget communication on May 30.
He said the increase has to do with “equity”.
In a new survey conducted by market research firm, Public Domain, 73 percent of participants viewed the new taxes for web shops as unfair.
In the foyer of the House, The Nassau Guardian asked Johnson to address the latest poll, but he said the question would be best directed to the Office of the Attorney General.
During his contribution, Johnson said he has heard the furor about the increased taxes on the sector, but said the sector was not properly taxed when it was regularized.
“The question remains as to whether the industry, which is a lucrative one at that, was properly taxed at its inception,” he said.
“If one were to conduct a comparative industry analysis of the taxation of gaming, it would be patently clear that the current taxation regime does not meet the current international industry standard.
“I heard the persons and what they are saying, that ‘we are being overtaxed and we’re spending too much’, but I just wanted to [say] that, Mr. Speaker.
“It is not for people out there gambling. You can have fun, but it can be an evasive addiction. And so, I say that to say, it has been proven there is a great social cost and how do you pay for that?
“I believe, and I know research supports it, it can be as addictive as alcohol, and there should be some warning. There should be some warning of the possible social detriments to doing it. But the question is how do we – and I think we have resolved that – how do we properly tax this industry?”
Johnson also suggested a link between the continued expansion of gaming houses in New Providence and the Family Islands, and the increased number of people seeking assistance.
“I know the minister of social services will say persons are coming and they are making requests,” he said.
“People are saying they don’t have [funds] to pay for medical bills and all these things.
“How is it that these places are growing so big? I agree with the member for Long Island; there are too much. I live on Cowpen Road and you see them just popping up.”
The Bahamas Gaming Operators Association has called on the government to provide evidence that The Bahamas gaming industry is undertaxed.
The group accused Turnquest of being misinformed regarding the technicalities of the gaming industry.
The group also 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”.
Yesterday, Minister of Tourism and Aviation Dionisio D’Aguilar said he will present the relevant data that justifies the tax increase during his contribution to the debate on Wednesday.
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.