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Casino taxes long overdue

Friday, May 5, 2017

In addressing members of the ruling party in Diego Martin on Tuesday, Finance Minister Colm Imbert suggested that the Government will soon implement the Gambling (Gaming and Betting) Control Bill, 2016 as a means of regulating the casino industry as well as ensuring that all casino owners, and owners of casino-type devices, pay taxes on the income generated.

Mr Imbert told members of the People’s National Movement that the Board of Inland Revenue had informed him that T&T has 125 casinos, of which only five pay the required taxes.

“That has to stop,” the Minister of Finance thundered, adding that he expected some opposition from casino owners—and the other retail outlets that house casino-type devices—as the Government attempts to bring the 96 per cent of these gambling establishments that pay no taxes within the confines of the law.

Mr Imbert is right that the fiscal and legal ambiguity that casinos find themselves in has to stop, as it is only by placing the casino industry into a legal framework that the Government can collect the taxes that these businesses have not been paying for years.

It is precisely because all governments in the last 20 years have failed in spectacular fashion to regulate and tax casinos that this industry continues to grow so vigorously, while other businesses that depend on the population’s disposable income are stagnant or in decline.

That most of the casinos in T&T do not pay the taxes that they should is, of course, grossly unfair to the thousands of business establishments throughout T&T who do. Since the general election in 2015, most businesses in T&T have been required to pay higher taxes on their income over $1 million, increased Green Fund and business levy, along with higher National Insurance contributions on behalf of their employees.

Have the country’s casinos, which all describe themselves as private members’ clubs, had to endure this additional tax burden?

The tax-free status of most casinos in T&T is also unfair and inequitable in this sense: Why should casinos, which generate about $10 billion a year in revenues (by Mr Imbert’s reckoning), not pay their fair share of taxes when the population is required to pay more for fuel, pay VAT on a wider range of goods as well as pay taxes on their property?

It is also clear that the Government simply cannot afford to allow casinos to continue riding the backs of the local population by living off the fat of the land for very much longer.

That’s because T&T’s 2017 fiscal deficit is likely to be $1 billion more than estimated as a result of the $500 million shortfall in the First Citizens offering of shares and the likelihood that the Government would be unable to collect the $503 million in property taxes by the September 30, 2017 fiscal year end.

It is quite likely that the Government will be forced to raise this additional $1 billion from the local capital market, where it may be required to pay a higher interest rate as a result of the downgrades that T&T has had to endure recently.

It would be much more financially prudent if, instead of borrowing the extra $1 billion, the Government could collect those funds from T&T’s casinos.

To do that, the Government would need to pass the long overdue Gambling (Gaming and Betting) Control Bill, 2016. This should not be difficult as the current legislation is almost exactly the same as a bill that was considered by the previous administration.

It is noteworthy that in February, when the legislation was sent to a Joint Select Committee (JSC), Opposition MP Ganga Singh lauded Mr Imbert for following the template established by his predecessor, Larry Howai.

And the fact that the casino legislation was sent to a JSC—which was supposed to consider the legislation and report to the House of Representatives by March 17, 2017—must be an indication that the Government is looking to create consensus on the necessity of taxing and regulating casinos.

It is also clear that the Government simply cannot afford to allow casinos to continue riding the backs of the local population by living off the fat of the land for very much longer.


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