By Ayanna Kirton, Staff Reporter
KEY PLAYERS in the gaming industry have raised concerns about the Government's move to impose the 15 per cent General Consumption Tax on lotteries and horse-racing wagers.
Though still in the process of discussing the ramifications of the decision with the company's directors, vice-president of Supreme Ventures, Roger Williams, sees the GCT as having potentially negative impacts, especially in the battle against illegal vendors of the company's 'Cash Pot' product.
Finance and Planning Minister Dr. Omar Davies announced during his closing budget presentation in Parliament on Wednesday that the Government would seek to plug a $1 billion gap in the budget by imposing the consumption tax on gambling. He said the Government is in fact expected to raise $2 billion from that source, and that it was being imposed in view of a decision not to go ahead with its proposal to impose consumption tax on pharmaceutical drugs, medical aides and agricultural inputs.
"This decision will tilt the playing field in favour of illegal vendors who do not have to pay taxes or finance overheads like legitimate gaming companies do," said Williams.
According to the Supreme Ventures vice-president, the gambling industry is already heavily taxed. "There are certain taxes and fees that we have to pay as a condition of our licence to play games," he explained.
"Last year, we paid out over $1 billion in special fees and taxes," Williams said. "For Supreme Ventures, 96 cents out of every dollar (earned) goes back out in prizes, commissions for agents, special taxes and fees," he added. "The GCT will have a serious impact on our business margins, which are already very thin and will cut into a substantial portion of our net revenues."
After two years of operation, Supreme Ventures has cut substantially into the market dominated by the Jamaica Lottery Company and amassed $8 billion in revenues last year. In an interview with The Gleaner earlier this year, Paul Hoo, president of Supreme Ventures, revealed that the company had garnered 75 per cent of the industry's market share.
And Howard Mitchell, chairman of the Jamaica Lottery Company, said that company has asked for a moratorium to examine the potential consequences of the GCT. "We were not given sufficient time to react to the decision so we are pressing for a moratorium to study the effects," he said.
NEW TAX REQUIREMENT
Mitchell explained that several accounting and administrative steps had to be taken in about 2,000 locations islandwide to implement the new tax requirement. He also felt that "there may be other ways to impose GCT within the industry that won't affect the market." According to him, "we have scheduled a meeting with the authorities. Hopefully, this dialogue will enable us to examine all the impacts sufficiently."
Xavier Chin, chief executive of Track Price Plus, described the 15 per cent GCT on gambling as "very devastating to the horse-racing industry." According to Chin, members of the industry were already trying to negotiate with the Government for a tax break in order to increase winnings and encourage gamblers to spend more.
He pointed out that the Government's decision was unprecedented and there was no inclination that such action was going to be taken. "After making an unsuccessful plea to the Government for a tax break we should have at least been informed of additional taxation," he said. "They should have consulted us to determine the feasibility of their decision. It is only a matter of time before the whole industry is ruined because we are now operating at the bare minimum," Chin added. "There is nowhere in the world where wagers are taxed," he said. "You always tax the winner."
