The government of the Bahamas has proposed a 2018-2019 national budget that will tax online gaming operators by as much as 50 percent of their revenue.
The Bahamas government plans to tax gaming operators by as much as half of their revenue.
The operators are furious after the Commonwealth of Bahamas announced its intention to increase tax rates imposed on the local web gaming industry. The Bahamas Gaming Operators Association (BGOA)—a non-profit organization representing licensed operators in the local gaming industry—expressed its members’ rage over what seems to them as excessive taxation.
According to the proposed 2018-2019 national budget, gaming house operators will be taxed through a sliding scale of rates applied to taxable revenues. The proposal explained that gaming houses making between BS$20 million to BS$80 million will be taxed at a rate of 25 to 35 percent. Meanwhile, those who made a revenue exceeding BS$80 million will be taxed at a rate of 40 to 50 percent. The government also plans to charge online gaming players with a five percent tax on customer deposits.
Bahamas Minister for Finance Peter Turnquest reported that the government collected BS$36.5 million in taxes from the gaming industry in fiscal year 2017-2018. Upon the approval of the national budget, the government is expecting around 100 percent increase or a total of BS$ 70 million in collected taxes.
The BGOA explained that the proposed taxation scheme is economic oppression. Alfred Sears, the attorney representing the BGOA, wrote to the minister of finance explaining that a tax increase without consultation with the gaming operators would wipe out the whole gaming industry in the Bahamas within a year.
Sears’ letter read:
“If the proposed sliding scale is implemented, then it would result in the Bahamian government… compulsory acquiring more than 90 percent of our clients’ revenue through various forms of taxation and licensing fees. Moreover, this would represent an anomalous 400 percent increase in the tax rate over the revenue collected by the Bahamas Gaming Operators.”
The letter requested for a dialogue between the government and the gaming operators in lieu of resorting to legal action. However, Sears warned that failure of replying to his letter will compel him to seek the attention of the country’s Supreme Court to protect his clients from “the unconstitutional, discriminatory, punitive, irrational, and unfair tax rate increase.”
The Bahamas currently has seven licensed gaming operators: A Sure Win, Chances, FML, Island Luck, Paradise, Percy, and UG. These operators cover 263 local web shops—places that run computer terminals where clients can play online casino games—all across the Bahamas.
Racist and Oppressive Tax Scheme
The BGOA accuses the Bahamas government of racially singling out gaming house operators. According to a press release, the government targeted the successful operators because majority of them are young and black.
The BGOA said:
“[What] concerns us more, is that this is being done at a time when, as far as any honest observer can see, the same level of scrutiny and examination was not done to other industries that are not predominantly black. It is totally another thing to expect that [government arbitrarily raising taxes] will be done because you do not belong to a certain political or social class.”
The association added that the government discriminates against one industry over another. BGOA pointed out that only the gaming industry—not commercial banks, the food industry, nor the port operators—received such large increase in tax rates.
The finance minister responded that the tax increase is not a racist way to single out the gaming industry. He argued that the government decided to impose new sliding tax rates to the gaming operators to “pay their share of the cost that is occasioned as a result of the activities that the [online gaming operators] promote.”
Turnquest, also the country’s deputy prime minister, said:
“We are all Bahamians and we all share responsibility of this government and we have looked at this industry and we have determined that there is room for additional taxation. This is not a discriminatory issue at all and I regret that people want to break this down into black and white issues, racial issues, because this is not what it is all about.”
A CEO of one of the licensed gaming operators warned that the heavy tax imposed upon the industry would force these operators to operate illegally once again.