One for You 19 for Me Say State Taxmen to Aussie Bookies
A recent story highlighted that these days are tough ones for the corporate bookmakers. Their margins are under a fresh assault by the taxing authorities.
The big corporates, domestic and multinational, are seeing the advantage of being based in the NorthernTerritory, where tax rates are the lowest, evaporate as various states such as South Australia, New South Wales, Western Australia and Victoria are looking for a slice of the action.
The states are imposing, or getting ready to impose, Point-of-Consumptions taxes of 15 percent of a bookmaker’s net revenue on a punt. Hypothetical examples show that by the time a racing bet is said and done, the bookmaker will keep less than half of the revenue the punter contributed. This is before the Federal Government comes along to claim another 30 percent of net bookmaker proceeds.
The scheme by the taxers is somewhat reminiscent of what is known in the USA as the “Amazon Tax,” so named for the company that made online retailing a huge threat to the traditional brick-and-mortar way of retail commerce.
For many years, online retailers were not required to collect and forward to the various states, sales taxes from online purchases, which gave them a decided advantage over retail stores, which collected sales tax at the point-of-sale, and then forwarded the proceeds to the departments of revenue for the state where the sale took place.
States relied on the honesty of taxpayers to report online purchases when tax returns were filed. That happened as close to never as can be conceived, as U.S. taxpayers find the taxman’s hand in their pocket every time they make a purchase or earn a dollar.
Australia may be a tad late to the game, but despite the inefficiencies of bureaucracy, the government has an insatiable addiction to tax revenue.
For the Australian corporate bookmakers, the scenario even gloomier when it comes to sports wagering, where turnover is only slightly better than half of what it is for racing.
As is true with wagering, all forms of commerce and since times immemorial, the consumer ultimately pays for new taxes when businesses are forced to raise prices to make ends meet and keep the doors open.