Govt to tax web shop winnings

Minister of State for Finance Kwasi Thompson announced yesterday that the government will implement a tax on gaming winnings on January 1, 2021.

In a communication in the Senate, Thompson said, “…Government revenue is projected to recover to 17.5 percent of GDP in 2021/2022, which is still below pre-COVID-19 and [Hurricane] Dorian levels.

“In the forward years, the expectation is for a gradual firming of government revenue to 19.5 percent in 2022/2023; and to 20.5 percent in 2024/2025.

“The forecasted revenue trajectory assumes the following revenue measures and policies, including plans to strengthen tax compliance, so everyone pays their fair share; improve tax administration to increase the revenue yield; continue pursuing equitable and progressive tax reform; and updating the tax incentives regime to properly incentivize productive investments and ensure they are delivering the overriding economic policy goals of growth and employment.

“To help counter the revenue losses, starting on January 1, 2021, the government intends to implement the gaming tax on winnings, passed in the House of Assembly in 2019 as part of the Gaming House Operator Amendment Regulations.”

Yesterday, Prime Minister and Minister of Finance Dr. Hubert A. Minnis tabled the government’s 2020 Fiscal Strategy Report (or FSR) in the House of Assembly.

The report was also tabled in the Senate and Thompson provided a communication on the Minnis administration’s fiscal strategy.

Financial Secretary Marlon Johnson told The Nassau Guardian that the tax on winnings could potentially yield up to $15 million through the end of the fiscal year.

The tax was originally slated to roll out in 2020.

When asked about the delay in rolling out the tax, Thompson told The Guardian, “Government revenues are at historic lows because of COVID-19. To move towards a fiscally sustainable track, the government had to find ways to recover revenue losses and to reduce expenditure.

“The government’s investment of over $177 million in COVID-19 relief to reduce the burden on the Bahamian people had a sizeable impact on government resources, hence the need to find other ways to improve the fiscal situation. The public service has a mandate to cut back $200 million in operating and capital expenses between now and the remainder of this fiscal year.

“On the revenue side, we looked through our fiscal options and although the gaming tax was under internal discussion, the government had authorization to move forward based on the 2019 Gaming House Operator Amendment Regulations.

“This is a tax on a discretionary item, and under the circumstances, we wanted to make sure all the government’s approved tax measures were being implemented.” 

In May 2018, the government announced a sliding scale tax on gaming house revenues and a five percent stamp tax on deposits.

However, web shop operators labeled the taxes discriminatory, unfair and wrong and claimed the increase in taxes would cause them to lose business.

Legal action from gaming operators forced the government to come up with an alternative tax structure.

“The Gaming Amendment Bill represents a negotiated resolution to the actions which attended the attempts of the government in 2018 to reform the basis on which gaming houses are taxed,” Attorney General Carl Bethel said while speaking in the Senate on July 22, 2019.

The government and gaming house operators eventually agreed to a new scale, which taxes gaming houses with net taxable revenue from $0 to $24 million at a rate of 15 percent, and those with net taxable revenue over $24 million at a rate of 17.5 percent.

They also agreed to a five percent tax on winnings up to $1,000 and a 7.5 percent tax on winnings over $1,000.

Yesterday, the attorney general said the tax will not apply to casinos.

“On-land casinos play a very important function not only as places where gaming revenue is earned,” Bethel told The Guardian.

“They bring…millions of tourists into this country every year who pay hotel room tax in addition to the taxes that the casino pays, who pay VAT (value-added tax) every time they buy something to eat or go out into the community, and who contribute enormously to the gross national product and the wealth of hundreds of thousands of Bahamians who either work in the hotel industry or provide services or other things to the hotel industry such as the Jet Ski operators, the hair braiders and the craft markets.

“So, the fact is there is a different economic module associated with casino gambling that does not apply to the gaming houses.”

The post Govt to tax web shop winnings appeared first on The Nassau Guardian.

source https://thenassauguardian.com/govt-to-tax-web-shop-winnings/