The government won’t get what it was hoping in terms of increased taxes from the gaming industry, but it believes it will get more than it collected in the past after it reached an agreement with gaming house operators on a new tax structure.
Tourism Minister Dionisio D’Aguilar yesterday said the new agreement secures revenue increases for the government and allows it to collect back taxes that remained elusive due to a court battle initiated by the gaming houses over the taxes imposed during the last budget exercise.
The government yesterday released a statement saying that it will collect about $35 million annually from a new sliding scale tax on net taxable revenue, and $15 million from a tax on winnings as a result of lottery bets.
With a retroactive start as of January 1, 2019, the government expects it will collect 15 percent on up to $24 million earned in revenue from gaming house operators.
Gaming house operators will pay an additional 17.5 percent on revenue over $24 million beginning January 1, 2019.
Winnings from lottery bets will be taxed as of April 1, 2019.
Five percent will be paid on winnings up to $1,000, and 7.5 percent will be paid on anything greater than $1,000.
There will be no tax on the winnings of casino games, such as “spinning”.
The sliding scale tax that became the subject of the court battle would’ve resulted in gaming house revenues up to $20 million being taxed at a rate of 20 percent; between $20 million and $40 million being taxed at a rate of 25 percent; between $40 million and $60 million being taxed at a rate of 30 percent; between $60 million and $80 million being taxed at a rate of 35 percent; between $80 million and $100 million being taxed at a rate of 40 percent; and more than $100 million being taxed at a rate of 50 percent.
The operators filed an application in the Supreme Court seeking leave for judicial review of that policy and a five percent stamp tax applied on deposits and any non-online games or digital sales. They also sought an injunction against levying the taxes.
Following the application, the government agreed not to impose the taxes but rather sought to have discussions with gaming operators to iron out areas in dispute.
Attorney General Carl Bethel said the government settled with web shop operators “several weeks ago”.
In its statement, the government said, “The new gaming tax structure represents a 127 percent increase in taxes on gaming operators, securing just under $50 million in total revenue, compared to $21 million in 2017. All back taxes will be collected before the end of this budget year at the previous 11 percent rate.
“The government had two objectives going into the most recent round of negotiations: to ensure the industry pays its fair share of taxes, and to end the deadlock between the government and the gaming industry.”
In May 2018, Deputy Prime Minister and Minister of Finance Peter Turnquest said the government was expected to collect $70 million in the 2018/2019 budget year.
But according to data revealed in the “First Six Months Report on Budgetary Performance,” which was compiled and released by the Ministry of Finance, the government collected $9.8 million in revenue from gaming taxes during the first six months of the fiscal year, which is below the year-earlier intake of $14.6 million.
“The ongoing delay in the implementation of the new schedule of taxes on gaming houses contributed to a $15 million shortfall in budgeted receipts, and placed receipts at only 14 percent of the $70 million anticipated annual yield,” the government said in the report.
Last month, Turnquest said the government had lost approximately $30 million in projected revenue for the fiscal year as a result of the delay.
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