The Tribune

* Top official argues levy non-discriminatory

* Argues web shops had sufficient warning

* 'Don't start New Year with COVID spike'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Ministry of Finance's top official yesterday argued that the imminent web shop patron winnings tax is a levy "on a specific type of game" rather than an attempt to discriminate against Bahamians.

Marlon Johnson, the Ministry of Finance's acting financial secretary, pushed back against arguments that the new tax - which is set to be imposed on the winnings of web shop patrons from New Year's Day - is discriminatory because it only applies to Bahamians while foreign casino gamblers pay nothing of this nature at all.

"The tax is a tax on a specific type of game. The lottery game; three-ball, four-ball, five-ball," he told a press conference on the just-released Fiscal Strategy Report, adding that such a tax would also be imposed on casino patron winnings if that industry introduced such a game.

"It's not a tax on Bahamians versus foreigners. It's a tax on a type of game," Mr Johnson repeated. Few observers, especially the domestic (web shop) gaming sector and its patrons, are likely to be reassured or convinced by the acting financial secretary's stance, though.

And his comments were earlier this week directly contradicted by Carl Bethel QC, the attorney general, who told other news media that the casinos were being spared from a patron winnings-style tax because they are critical to a tourism industry that generates thousands of jobs, hundreds of millions of dollars in economic activity, and is the country's biggest foreign exchange and tax revenue earner.

Suggesting that the web shop industry's economic contribution is much smaller, and that it effectively redistributes wealth from the many to the few, Mr Bethel was quoted as saying: “Their [the casinos'] presence creates thousands of jobs for Bahamians in the tourism sector.

""In short, the casinos make a far greater contribution to employment and economic activity throughout the Bahamian economy than gaming houses. This is why the taxation in casinos is where it is."

Mr Johnson, meanwhile, also yesterday rejected the web shop industry's assertions that it has been given insufficient warning to properly roll-out the patron winnings tax from New Year's Day.

Arguing that the sector had known from last year that the levy was coming, he said: "As far as I understand, this actual tax structure was negotiated with the gaming houses back in 2019. They were aware of the tax for over a year, were aware of what it meant, they were consulted and there were discussions.

"As far as we've come to understand, working with the agency that deals with them, they've been fully briefed, they're fully on board, the understand the parameters, and we will work with the Gaming Board to ensure there's compliance and take into account any concerns the gaming industry has. We believe it can work, and there's a way for it to be done within the time set by the Government."

The web shop industry had earlier this week argued that three weeks was insufficient notice to ready their systems, operations and customer service for the new patron winnings tax. They also called on the Government to reconsider the timing due to the "additional burden" it will impose on COVID-hit consumers.

Leander Brice and Garvin Newball, A Sure Win's co-chief executives, told Tribune Business their clients need "more time to bounce back" given the hardship imposed by the pandemic's devastation of employment and incomes.

"We understand the constraints of the Government and the need for new revenue opportunities, but we truly understand the plight of our gamers and we urge consideration in the timeline of this new tax roll-out to give our patrons a bit more time to bounce back in this current economic climate," they said.

Mr Johnson yesterday confirmed the new patron winnings tax is projected to yield an extra $10m-$15m over the final six months of the 2020-2021 fiscal year. While a relatively small sum in the overall fiscal scheme of things, it will certainly shrink gamblers' winnings at a time when they will be hoping to land every cent possible due to COVID-19 related high unemployment and income cuts.

The new winnings tax will see five percent paid on winnings up to $1,000, and 7.5 percent on anything greater than $1,000. Dionisio D’Aguilar, minister of tourism and aviation, said previously that just 45 percent of web shop gaming activities will attract the new patron “winnings” tax with online casino spins remaining untouched “for now”.

This means that a gambler who wins $1,000 will pay $50 in tax, reducing their take-home winnings to $950. Someone who wins $2,000 will pay $150 in tax, leaving them with $1,850 to take home.

Mr D'Aguilar also added that the Government had decided to focus this levy solely on lottery/numbers operations because it was too “complicated” to calculate the winnings from online casino spinning, indicating that Bahamian gamblers had got off relatively lightly.

Meanwhile, Kwasi Thompson, newly-appointed minister of state for finance, yesterday said the Government is "confident that we are seeing light at the end of this tunnel" due to the roll-out of COVID-19 vaccines as well as the tourism industry's slow relaunch.

However, he warned that the Bahamian economy's fate, and the financial well-being of citizens and residents, is in the near-term inextricably bound up with the task of keeping local COVID-19 infection rates as low as possible so that tourism can restart and as much of the economy as possible remain open.

"No one wants to start the New Year with a January spike, and it is up to each and every one of us to do our part," Senator Thompson added. "Our success is still dependent on our collective behaviour and discipline, so every Bahamian and resident should keep this in mind as they go about their private lives this holiday season.

"The pandemic wiped out the savings of many Bahamians who had big dreams for their families and businesses that are now on hold. The pandemic caused many hard-working Bahamians, who value the dignity of work, to become dependent on the state for the first time in their lives."

Mr Thompson added that the Government has dedicated an extra $60m in combined unemployment benefits and food assistance to support pandemic-hit Bahamians between November and into 2021. This follows $17.2m in food assistance that was provided to end-October, with a further $10m having been budgeted to take the initiative through to year-end.

"This has been no ordinary year: That is painfully clear. COVID-19 has scarred our economy and transformed our lives forever," the minister said. "We shall do everything in our power to restore the economy for sustainable and inclusive macroeconomic growth. That will improve the lives of Bahamians."