By KHRISNA RUSSELL

Deputy Chief Reporter

krussell@tribunemedia.net

DESPITE admitting the government’s first rates of taxation for number houses were “probably overly ambitious”, Tourism Minister Dionisio D’Aguilar has warned non-compliant operators behind on taxes face losing their licences.

“We will move with haste and determination to shut your illegal activities down,” he cautioned at Parliament yesterday, adding it was unfair for some operators to think they did not have to pay their taxes. 

While it is hoped this warning does not fall on deaf ears, the minister said the government is eyeing a revenue turnover of $32m to $34m from web shop taxes.

Initially, the Minnis administration hoped the tax would yield $50m, but the new lower rates of 15 percent and 17.5 percent reduced the estimate.

However, he said a winnings tax with gains of $10m to $15m is expected to bring government’s projected revenue close to its initial estimate.

Official Opposition Leader Philip “Brave” Davis criticised the Minnis administration, saying had it consulted with all stakeholders and gained proper industry knowledge, it would not have needed to bring new amendments to the House of Assembly.

The seven licenced operators run 360 locations throughout the Bahamas. They employ 2,800 people who earn $220 each week - $10 above minimal wage and equating to $33m a year, the minister said.

“Mr Speaker, when the government provided its undertaking to review and then adjust its rates with effect from January 1, 2019, two gaming houses immediately adopted the new rates and have been paying the new higher rate of tax since then,” the Freetown MP told Parliament ahead of it passing the Gaming Amendment Act 2019.

“These two gaming houses are, thankfully, the two largest gaming houses and will contribute over 70 percent of the tax the government expects to generate from gaming. The remaining five generally smaller, gaming house operators are adopting any number of legal strategies to delay their paying either the old rate of 11 percent or the new rate of 15 percent but, with the introduction of greater enforcement powers to the Gaming Board in this bill, I warn those non-compliant operators that, in order to continue to operate in the gaming industry of the Bahamas, they will have to catch up on their outstanding taxes or lose their licence to operate.”

He continued: “A number of the smaller houses have assured me that, with the passage of this new legislation and accompanying amendments to the regulations, they have every intention of catching up and so, I am optimistic of a positive outcome.

“But, to those who are operating in this market without a licence or have no intention to catch up on their back taxes, we will move with haste and determination to shut your illegal activities down. After all, Mr Speaker, it is simply not fair to all of us, both consumers and business owners, who faithfully pay our taxes every day of the year, to have persons/business owners living amongst us believing that they do not have to pay their fair share of the tax burden that we all carry.”

He also said: “With hindsight, trying to take the tax rate from 11 percent to an effective rate of 28 percent in one year was probably overly ambitious. As such, the government gave an undertaking to review the rates and ultimately decided that a more incremental approach was probably better in the long run than one big jump all at once.”

Regarding the winnings tax, Mr D’Aguilar said this aspect of the legislation may act as a deterrent to prospective players.

This tax will allow a five percent rate on winnings less than $1,000 and 7.5 percent on more than $1,000. Any winnings from online casino operations will not be taxed, he said.

“Given the aforementioned growth in the domestic gaming market of about $20m in revenues annually, governments are always mindful of trying to balance growth in gaming and protecting its citizens from the destructiveness of gambling.

“If this new winnings tax deters some of our citizens from gaming, is that really such a bad outcome? If gambling continues to grow and grow and grow, ploughing more and more money into an unproductive sector of our economy taking money away from mortgages, health care, education and the like, the governments seeks to get a greater share of that revenue to fund things that help the many as opposed a past-time that is obviously enriching the few.

“Since, this will be a new tax, the amount that the government hopes to derive involves a certain amount of speculation but the gaming houses operators have estimated that it should amount to between $10m to $15m bringing us closer to the $50m we had originally hoped to derive from the gaming industry.”

He was not the only member to highlight the impact that gambling has had on families.

Financial Services, Trade and Industry and Immigration Minister Elsworth Johnson highlighted a provision in the bill that will allow relatives of players to seek an order from the court for exclusion.

The order would allow web shops to bar particular players from entering and playing should their actions prove addicting and has an effect on family life.

He urged Bahamians not to hesitate to use the provision where needed.

The Yamacraw MP also said there were too many web shops in certain areas.

The government intends to table amendments to the regulations at next week’s sitting of the House of Assembly.