D’Aguilar: Famine time for web shops reasonable
Minister of Tourism and Aviation Dionisio D’Aguilar said last night that if the sliding scale of taxes proposed on the gaming operators becomes too “onerous” and “undesirable” the government would adjust the taxes.
But D’Aguilar defended the decision to increase the taxes, noting that it is equitable given the explosive growth in the domestic gaming industry since it was legalized.
“I want to categorically state that this government is populated with reasonable people,” D’Aguilar said during the 2018/2019 budget debate.
“If this tax turns out to be too onerous and that in turn causes an undesirable income, we will adjust.
“Every year we are in office, we will look closely at this industry and ensure that the Bahamian people are getting their fair share.”
D’Aguilar, the minister with responsibility for gaming, was responding to concerns from the seven licensed gaming operators that the increase in taxes proposed for the industry would cause them to lay off employees, shut down locations and negatively impact their businesses.
D’Aguilar said the industry is growing rapidly and the government believes that the current level of taxation – 11 percent of gaming house revenues – is too low.
He said the government estimates that Bahamians spent over $500 million on gaming in 2017.
Of that $500 million, the seven gaming houses ended up keeping $200 million, he said.
D’Aguilar said this $200 million “represents an enormous growth in sales since the gaming industry was legalized”.
“As the gaming houses contemplate or threaten to close locations, I want them to remember a few things: First and foremost, The Bahamas and the Bahamian people have been very good to the owners of the gaming houses,” D’Aguilar said.
“I estimate that the seven owners have collectively earned a whopping $150 million over the last three years in salaries and profits.
“Yes, God has been good to the gaming house operators. They have earned $150 million between the seven of them over the last three years.
“Conversely, over that same three years, the 2,800 persons that work for these same seven gaming houses collectively have been paid just $96 million, which if you do the math works out to be exactly $210 per week plus $9 per week in benefits.
“They all get minimum wage.
“So please, as you contemplate downsizing, remember that you have enjoyed many years of feast and if you must suffer through one year of famine in order for us to get to that sweet spot of the perfect level of taxation we will remember any good deeds that you do.”
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 government has also proposed taxing gaming patrons through a five percent stamp tax applied on deposits and any non-online games or digital sales.
FML Group of Companies CEO Craig Flowers has said the increase in taxes is a “death warrant” for the industry and may force operators back underground.
Hundreds of protesters gathered outside the House of Assembly yesterday to voice their opposition to the planned gaming tax increases and the planned increase in value-added tax (VAT) from 7.5 percent to 12 percent.
Many of the protesters were web shop employees.
Building on Deputy Prime Minister and Minister of Finance Peter Turnquest’s argument that the tax increase is equitable, D’Aguilar said the government is only seeking to get its fair share from domestic gaming.
“Right now the government earns 11 percent of all gaming revenues,” he said.
“The gaming house operators get to keep the remaining 89 percent.
“This is the crux of the issue. Is the 89 percent that the operators get versus the 11 percent that the government gets a fair distribution of the sales earned on domestic gaming?
“Is it fair that on the $250 million that the domestic gaming businesses are projected to earn in 2018, the government gets $24 million and the domestic gaming operators get to keep $191 million? Is that fair? They get $191 million; the government gets $24 million. This government believes hell no.
“I know the Bahamians are resoundingly behind us on this one. They get $191 million and the people get $24 million.
“I know you, and you know, and they know that the gaming house operators and the PLP, they know, that this was no longer an equitable provision of the gaming revenue.”
D’Aguilar said the seven gaming house operators have 363 locations in The Bahamas.
He said there are 210 web shops in New Providence; 41 in Grand Bahama; 31 in Abaco; 25 in Eleuthera; 14 in Exuma; 13 in Andros; eight in Long Island; six in Bimini; three in San Salvador; two in Inagua; two in Cat Island; two in the Berry Islands and one in Acklins.
“There are definite social costs to gaming,” the minister said.
“With $200 million being sucked out of the economy to gaming, that is going to cause serious social problems in which the government is going to have to pay.
“While the government does not want to shut down the gaming houses, it is in the national interest to ensure that the amount of money being directed into this gaming sector does not continue to grow uncontrollably.
“So with that in mind, the government decided to apply a five percent stamp tax to all cash added to accounts or played directly into the gaming houses.
“We do not want people to be deterred from gaming. We want them to think that it is a bad deal because it is a bad deal. We want them to stop logging in online or going for hours to a gaming house location and gambling all their hard-earned money.
“As the amount of money being plied into the gaming industry continues to grow and grow and grow the government is growing fearful that our people, in ever increasing numbers, are thinking that they can make a living through gaming, which we all know is simply not possible.”
D’Aguilar did admit that he does expect some operators to close their doors.
“There are a number of gaming houses threatening to close their doors and lay off people,” he said.
“As I look at the numbers, I expect that further consolidation will happen in the domestic gaming market.”
He continued, “Of the seven gaming houses, there are three that are either too small or have been increasingly losing market share over the past three years. Unless something dramatic occurs, I expect them to begin to close locations.
“So when it happens, I do not want the people to cry shame on the government
Education: College of The Bahamas, English