Johnson uncertain projected $15 million can be collected from gaming winnings tax

The government is no longer certain it could recover as much revenue from taxing gaming winnings as it had previously projected, a senior official in the Ministry of Finance said yesterday.

The government announced in December that it would finally implement the 2019 Gaming House Operator Amendment Regulations, which allows for a five percent tax on winnings up to $1,000 and a 7.5 percent tax on winnings over $1,000.

Acting Financial Secretary Marlon Johnson confirmed the law came into effect on January 15, after being delayed more than a year.

He had initially projected in December that the government could collect as much as $15 million in government revenue.

Asked if he still believed the government could collect that much given the recent 43.3 percent drop in gaming tax earnings for the first half of the year, Johnson said “I can’t say for certain. One of the things that I repeat, honestly, is that there’s still a lot of uncertainty in the economy because of COVID-19, not only in the domestic space but in terms of what happens internationally and international travel. So we’re watching it keenly.”

According to the Combined Six Months Fiscal Snapshot and Budget Performance Report, a reduction in economic activity and higher unemployment adversely impacted gaming/betting activity, reducing gaming taxes by $8.4 million to $11 million.

“The $11 million was based on the fact that like everywhere else the economy was down. There was an explanation that there was activity compared to last year because of course the drop-off in patrons having the ability to pay. That isn’t unsurprising what happened,” Johnson said.

He continued, “You will still have ongoing gaming activity in January and beyond, with a domestic economy that is more open now than it certainly was in the first quarter of the year, so we will see some natural uplift there. You have to remember that for the month of August, the gaming houses were closed when we had total shutdown, so there are a couple of contributing factors.”

Johnson said the ministry will have to ascertain the impact of the newly implemented winnings tax on revenue “and see what that is”.

Gaming house operators are already taxed on a sliding scale based on net revenue, paying 15 percent on earnings between $0 to $24 million and 17.5 percent on revenue over $24 million.

In its recent Article IV staff report the International Monetary Fund (IMF) urged the government to announce a credible medium-term tax policy.

The government revealed last year that it will conduct a review of the country’s tax regime, aimed at implementing reforms, but has not given an update on the status of that review or plans to restructure the tax system.

“We have seen a pick up over the last three months in revenue performance. That is encouraging, but of course all of that is tempered by the shared understanding that if there is another (COVID-19) surge domestically and ongoing challenges in our North American markets, all of that can change the trajectory of our budgets,” Johnson said.

“Right now the ministry is cautiously optimistic based on the last three months, but understands that forecasting is fraught with challenges that COVID-19 has brought.”

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Paige McCartney

Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas. Paige started working as a business reporter in August 2016. Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News

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