The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Island Luck employees were seemingly threatened with the loss of a day’s pay if they did not attend yesterday’s anti-VAT and gaming tax protest in Rawson Square.

Sources close to the web shop suggested the “pay cut” warning was untrue, but an internal staff memo written by Island Luck’s operations manager said it was “mandatory for all staff to be in attendance”, with the company’s operations closed until 3pm.

The memo, carrying Antoinette Lotmore’s name, highlights the extent of the organisation behind yesterday’s demonstration, with employees told to report to four “pick-up points” - from where they would be bussed to the Southern Recreation Grounds - “at 6.45am sharp”.

The document, which was sent to Tribune Business and widely circulated on social media and online, also told Island Luck and Ultra Games workers that “no company or political logo or paraphernalia” were to be brought or warn to the protest against the 2018-2019 budget tax increases.

“Kindly be advised that Island Luck and Ultra Games will be supporting the march scheduled for tomorrow morning, commencing from the Southern Recreation Grounds,” the operations manager wrote.

“All branches and customer service departments will be closed until 3pm tomorrow [yesterday], and it’s mandatory for all staff to be in attendance. Staff will be required to sign in before the march, and sign out after the march.”

The memo then reiterated that “attendance is mandatory for persons scheduled to work the morning shift”, and added: “Failure to sign in and sign out will result in a pay cut for the day.”

Sebas Bastian, Island Luck’s principal, declined to comment when contacted by Tribune Business about the e-mail. However, one well-placed Island Luck source said that while the web shop chain had “encouraged” staff to participate they had “no knowledge” of the ‘pay cut’ warning and suggested this was not true.

“The staff were encouraged to support the march obviously, as it’s their jobs that are at stake,” the source added. “It was not our march; they just joined an already planned march. The paid part is not true to my knowledge.”

Ms Lotmore’s memo, meanwhile, told Island Luck and Ultra Games employees to report to four ‘pick-up’ points - the Prince Charles Shopping Centre, Southwest Plaza, Collins Avenue and Boyd Road - depending on which web shop location they worked at.

“You must report to the pick-up point that has the location that you are normally scheduled at,” the memo said. “Buses have been arranged to pick up the staff from four key locations at 6.45am sharp.”

Tribune Business was able to confirm that the correct phone number for Ms Lotmore was listed on the memo, although she was said to be out of office when this newspaper called after 3pm yesterday afternoon. The document, based on this newspaper’s checks, appears genuine.

Island Luck will likely argue that yesterday’s protest was effectively a ‘working day’ for its employees, hence the warning that a day’s pay would be lost if they failed to show up without just cause.

And, given industry predictions that it will be forced to cut 2,000 jobs and shed 192 locations if the Government follows through with its planned tax structure, there was already more than enough motivation for Island Luck and other web shop employees to attend and voice their objections outside the House of Assembly.

While much of yesterday’s protest seemed to be heartfelt, the web shop taxation controversy has become increasingly divisive. The industry’s opponents are likely to seize on the memo as evidence that yesterday’s demonstration was largely manufactured by an alliance between the sector and the Government’s political opponents.

Dionisio D’Aguilar, minister of tourism and aviation, last night hit back at the web shops’ lobbying against the new ‘sliding scale’ tax structure by arguing that just 5 per cent of its revenues would attract the highest 50 per cent rate.

He used his Budget debate contribution to suggest that the taxation structure had been misunderstood, with different portions of web shops’ revenue attracting different rates as opposed to a single rate falling on an operator’s entire revenue.

Mr D’Aguilar said 50 per cent of the industry’s $196 million in gross gaming revenue (GGR) falls into the lowest tax bracket, attracting the 20 per cent rate that the web shop sector and its consultants suggest is in line with global benchmarks.

He added that six out of the seven licensed web shops fall into the 20 per cent category, while the 25 per cent, 30 per cent and 35 per cent rates would each apply to a further 10 per cent of industry revenues - meaning that 80 per cent of the industry’s GGR would come under the four lowest rates.

Mr D’Aguilar’s House of Assembly address suggests the Government and industry may be closer than originally believed, and that room for an 11th hour compromise still exists despite threats of legal action.

He added that the web shop sector’s average tax rate was being increased from 11 per cent of revenues to 28 per cent, which he described as a 150 per cent rise - well below the industry’s estimates of increases up to 355 per cent.

The Minister, though, argued that the web shop sector was well-placed to bear an increased taxation burden given the $500 million in player spend that it attracted in 2017.

“Of that $500-plus million that Bahamians spent on gaming, the seven gaming houses ended up keeping $200 million in 2017,” Mr D’Aguilar said. “And this $200 million represents an enormous growth in sales since the gaming industry was legalised.

“In 2015, their first year of legal operation, the sales of these seven gaming houses grew a whopping $42 million in one year….from $112 million in 2014 to $154 million in 2015.

“In 2016, their sales grew another $21 million to $175 million. In 2017, their sales grew another $20 million to $195 million. And, in 2018, their sales are projected to grow another $20 million to $215 million,” he continued.

“Right now, the Government earns 11 per cent of all gaming revenues and the gaming house operators get to keep the remaining 89 per cent. Mr Speaker, this is the crux of the issue. Is the 89 per cent that the operators get versus the 11 per cent that the Government gets…..a fair distribution of the sales earned on domestic gaming?

“Is it fair that on the $215 million that the domestic gaming business is projected to earn in 2018 the Government gets $24 million, and domestic gaming house operators get to keep $191 million? Is that fair, Mr Speaker……they get $191 million……the Government gets $24 million?”

The present tax structure requires web shop operators to pay 11 per cent on taxable revenue or 25 per cent of EBITDA (earnings before interest, taxation, depreciation or amortisation), whichever is greater, plus a 2 per cent contribution to community causes - equating to 13 per cent of gross gaming revenues.

However, under the Government’s proposed new ‘sliding scale’, web shops will pay:

• Up to $20 million in revenue, a rate of 20 per cent.
• Between $20 million and $40 million, a rate of 25 per cent.
• Between $40 million and $60 million, a rate of 30 per cent.
• Between $60 million and $80 million, a rate of 35 per cent.
• Between $80 million and $100 million, a rate of 40 per cent.
• Over $100 million, a rate of 50 per cent.