Monday, Jun 25, 2018
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Web shop owners will fight for PLP return

The Minnis administration introduced a significant tax hike on gaming operators as part of its 2018-19 budget.

On January 28, 2013, the Bahamian people voted against legalizing web shop gaming in a non-binding referendum. The Progressive Liberal Party (PLP) administration ignored the will of the people. Web shop gaming was made legal.

Going against the people was a contributing factor to the PLP losing the next general election.

The web shop gaming industry is currently taxed at 11 percent of adjusted gross revenue or 25 percent of EBITDA (earnings before interest, tax, depreciation and amortization), whichever is greater. The Minnis administration thought that was not enough. It introduced a significant tax hike as part of its 2018-19 budget.

Minister of Finance Peter Turnquest said 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 a rate of 25 percent; those that make between $40 million and $60 million a rate of 30 percent; those making between $60 million and $80 million a rate of 35 percent; those making between $80 million and $100 million a rate of 40 percent; and gaming houses bringing in more than $100 million at a rate of 50 percent.

The web shop owners were incensed.

“It is further disappointing that in today’s Bahamas an entire industry can be singled-out and in our view, racially targeted for an increase in government taxes,” said the Bahamas Gaming Operators Association on May 30 in response to the tax increase announcement.

“This is hardly what you would expect in a free-market economy where persons are now being targeted because they run an efficient and profitable business. But what concerns us more, is that this is being done at a time when, as far as any honest observer can see, the same level of scrutiny and examination was not done to other industries that are not predominantly black owned.”

Craig Flowers, CEO of FML Group of Companies, one of the biggest web shops, said on Monday the government’s proposed increase in taxes for gaming house operators is a “death warrant” for the industry. He warned that operators may be forced back underground – an allusion to their days operating outside the law.

“If the web shops are forced to go back underground or remove themselves from a regulated environment this whole exercise fails,” he said on the Love 97 FM talk show “On Point” with host Wendall Jones.

“They are bordering very closely, very, very closely on that thin edge.”

The taxes imposed on web shops won’t cause them to close. That’s hyperbole. Too much money is being made for that to happen. The cries are part of an attempt to get sympathy from the public.

The web shop owners are lucky the government did not decide to make their brand of gambling illegal again and create a national lottery system. In this scenario web shops would be shut down and police would be serious about stopping illegal gaming through arrests, prosecutions and seizures.

The Minnis administration’s decision to up web shop taxes will lead to one major consequence. It will make web shop owners go all in for the PLP. All the resources they have and every statement they make from now until the next general election will be to bring down the governing Free National Movement (FNM). The web shop owners want their party (the PLP) back in power to remove these taxes. And with all the funding and support the PLP will receive from them, be assured that if that party wins at the polls the first thing it would do is cut web shop taxes.

The PLP-web shop alliance will be a formidable foe to this government. Bahamians will have to decide if they think rich web shops should pay a reasonable amount back as suggested by the FNM, or if these companies and their owners should have their own PLP government in power to lessen their burden and make them richer.

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