The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government is betting that the “full effect” of the revised web shop gaming tax structure will generate a 43.5 percent year-over-year increase in the upcoming fiscal year, a top official said yesterday.

Marlon Johnson, the Ministry of Finance’s acting financial secretary, told Tribune Business it is projecting that the first full year of the two-tier operator taxation structure will produce one of the few revenue gains in the 2020-2021 budget.

“This will be the first full year that the new taxation regime will be in effect,” he said of the ministry’s rationale for the revenue rise. “That’s what speaks to the increase and factored into the trajectory. There are a few other areas with increases, but that’s the most significant one.

“We anticipate, as with everything else, that there might be less gaming, but with the taxes in full effect that will create the bump up in projections.” The government is projecting that taxes paid by web shop operators in the 12 months to end-June 2021 will rise by 43.5 percent compared to the 2019-2020 projections, jumping to $23.1m compared to $16.093m.

The projected $7m increase also comes after web shop gaming taxes collected during the first nine months of the 2019-2020 fiscal year exceeded the latter figure, which was for the full year. The 2020-2021 budget projections still represent a 25 percent rise on the $18.483m collected during the nine months to end-March 2020.

Mr Johnson added that the budget estimates did not include the taxation on patron winnings, and only reflected what is being imposed on operators. All licensed gaming operators pay 15 percent on their first $0 to $24m of revenue, and operators earning anything greater than $24m will pay 17.5 percent on sums above that threshold.

Tribune Business reported in early March 2020, just before the COVID-19 lockdown, that the government had yet to correct an “embarrassing oversight” in failing to specify when the web shop patron winnings tax takes effect.

The regulations failed to give the date for when the tax would start when they were laid in the House of Assembly last year, and the Government had planned to correct this until the pandemic intervened. The date oversight has added further delay to the levy’s imposition, as web shop operators were last year afforded additional time to have their games tested and certified by independent laboratories that the terms and conditions had not been altered due to the tax’s introduction.

The new winnings tax, when it eventually comes into effect, 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, told the House of Assembly earlier this year that just 45 percent of web shop gaming activities will attract the new patron “winnings” tax with online casino spins remaining untouched “for now”. He 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.

Mr D’Aguilar said this “small tax on winnings” was projected to yield between $10m-$15m annually for the Public Treasury and help take the government closer to the $50m total web shop revenue target it had envisioned under the initial tax structure for the industry.

He indicated that Bahamian gamblers had got off relatively lightly, as the comparable winnings tax rates in Jamaica and Barbados are 15 percent and 20 percent, respectively. In the US, he added that the federal tax rate was 25 percent, with state and local taxes on top of that.