NASSAU, BAHAMAS – Having reached an agreement with gaming operators on Wednesday, Dionisio D’Aguilar, the minister with responsibility for gaming, said he is satisfied with the taxes that the government is presently getting under the new agreement, as to take the matter to court would have taken years.
“We are doubling the take that we get from gaming,” D’Aguilar told reporters on the sidelines of the commissioning ceremony for Bahamasair’s new jet.
“Right now we get $22 million under the old scenario and the new tax structure will take us close to $50 million, so we felt that it was better to settle for 50 than to have no tax coming in for many, many years as we litigated the issue.”
The government announced last May that a five per cent stamp tax would be applied to all gaming patron’s deposits, all non-online games and digital sales.
It also announced a sliding scale tax on the gaming sector.
The taxes were originally set to take effect on July 1, 2018, but both had been delayed.
Last August, gaming house operators filed an application in the Supreme Court seeking leave for judicial review and an injunction of the government’s proposed stamp tax on its patrons and the sliding scale gaming tax.
The move prompted the government to avert imposing the taxes, and instead, seek to have further discussions with gaming house operators to come to an agreement on the way forward.
Yesterday, D’Aguilar said litigation with the gaming house operators could have taken five or six years.
“I don’t know how long litigation would take, but the prime minister was like, hey, let’s get this settled, let’s get the money coming in as we can’t afford to be waiting years and years for this to be litigated in the courts, so let’s settle on what we feel was an acceptable compromise where we get in excess of 120 per cent additional tax revenue,” D’Aguilar said.
A statement issued Wednesday from the Office of the Prime Minister (OPM), outlined that effective January 1, 2019, all licensed gaming operators will pay 15 per cent on $0 to $24 million dollars of revenue and operators earning anything greater than $24 million will pay 17.5 per cent.
“Based on the increased tax rate, the government is expected to collect approximately $35 million in taxes from gaming houses annually,” the statement read.
Also, effective April 1, 2019, a new tax will be introduced on all winnings derived from lottery bets.
Five per cent will be paid on winnings $0 to $1,000 and 7.5 per cent on anything greater than $1,000.
The government said this new tax is expected to raise $15 million annually in tax revenue for the government.
As for casino games, there will be no taxes derived from winnings.
The government said the new gaming tax structure represents a 127 per cent 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 per cent rate,” the statement read.
D’Aguilar admitted on Thursday that while the final outcome was not what the government wanted, they are still satisfied with the outcome.
“We came into office saying we wanted to increase our take from the gaming industry and it was a hard negotiation and we compromised,” D’Aguilar said. “I think it was a win for the government and the people of The Bahamas getting additional tax revenue from the gaming industry.”
Meanwhile Gershan Major, the CEO of the Bahamas Gaming Operators Association (BGOA) said while it is always beneficial to avoid a lengthy court battle, the government’s newly designed tax regime still represents a 65 per cent tax increase which some gaming operators will still find difficult to manage.
“The industry was never opposed to an increase in taxation and always was willing to pay its fair share, however the methodology to achieve the increase was the crux of our disagreement,” Major told Eyewitness News.
“This ordeal highlights a broader challenge and signals the need for a deeper look at our national tax regime and the issue of proportionality.
“At some point as a nation, we must address the inequitable way taxation is levied within and across the industries that we pay our fair share in these trying economic times.”