Parties take opposite sides on web shop gaming
The decision by the Christie administration to go against the will of the people in the January 2013 gaming referendum was one of the reasons why the Progressive Liberal Party (PLP) lost the 2017 general election. Sixty percent of the Bahamians who voted in the non-binding poll were against legalizing web shop gaming.
The perception was that the PLP, the then governing party, was so tied to gambling interests that it had to follow what the sector’s leaders wanted.
The Free National Movement (FNM) was critical of the PLP for going against the will of the people. Some in the FNM’s coalition want the party to make web shop gambling illegal again. They prefer a national lottery.
The Minnis administration has rejected that approach and taken a middle road. In the upcoming fiscal year it will increase web shop taxes. Gaming house revenues up to $20 million will be taxed at a rate of 20 percent; between $20 million and $40 million will be taxed at a rate of 25 percent; between $40 million and $60 million at a rate of 30 percent; between $60 million and $80 million at a rate of 35 percent; $80 million and $100 million at a rate of 40 percent; and more than $100 million at 50 percent.
The current tax rate is 11 percent or 25 percent of EBITDA (earnings before interest, tax, depreciation and amortization), whichever is greater.
Attorney Wayne Munroe said yesterday he has been instructed by the Bahamas Gaming Operators Association (BGOA) to take the government to court over its proposed sliding scale tax. The gaming bosses accuse the government of discrimination. The government rejects this.
Attorney Alfred Sears QC wrote to Minister of Finance Peter Turnquest on May 31 on behalf of the BGOA requesting a meeting to discuss the tax and warned that if he declined to respond in seven days the group would seek legal action.
That deadline was on Friday.
Munroe and Sears are two of the country’s best attorneys. Both were candidates for the PLP in the last election. Sears also served in the first Christie administration.
Leader of the Opposition Philip Brave Davis raised his concerns about the gaming tax increase in a news conference last week.
“In light of the tax structure assessed in every other industry, what could be the possible rationale for the 350 percent tax hike on web shops other than to drive them out of business and place more than 3,000 Bahamian jobs at risk,” he said.
Former PLP minister Obie Wilchcombe publicly criticized the government for the gaming tax hike, too.
On the other side, the FNM thinks the web shops take too much from poor people and that this money ends up enriching the numbers bosses. Web shops are ubiquitous in poor communities.
At a time when the government needs more revenue to invest in the people, the now governing FNM seeks to direct more gaming revenue from the local sector toward the public good.
Yesterday, Minister of Tourism Dionisio D’Aguilar, who is responsible for gaming, said he does not think the tax increase is discriminatory, insisting “sin” taxes are traditionally high.
“You either agree that it’s a sin or not a sin, and if you agree that it’s a sin then all sins are taxed heavily,” he said.
“The crux of the discussion is, where is the threshold: where is it high and where is it low? That is the $45 million question. That’s what we have to decide and when I speak to Parliament, I will speak to that matter.”
Asked whether the government could still adjust the rates, D’Aguilar said as far as he is concerned the pending rates are “set in stone now”.
The parties stand as opposites on this issue. The PLP is with the gaming bosses. It thinks their businesses should be lightly taxed. The FNM thinks they should pay more.
If the PLP were to win the next election one of the first things it would do is reduce gaming taxes. An FNM administration would mean gambling operators pay more.
Both positions are rational. Voters will have to decide which policy they think best for the country.
If you want better roads, more contributed to the public purse for education, infrastructure and debt relief, then you would oppose the PLP view.
If the PLP wins and drops the web shop taxes don’t be upset. The party has been consistent with its support for the sector. It is open and transparent on this issue.