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Island Luck Chief: ‘I Was Misled’ On Web Shop Taxes

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

ISLAND Luck’s principal is alleging that the Government “misled” him over planned web shop tax increases, adding: “My legitimate expectation in a proper consultation was dashed.”

Sebas Bastian, in an affidavit supporting the operator’s Judicial Review challenge to the 5 percent “patron tax”, alleges that the taxation proposals discussed when he met with the Prime Minister almost a fortnight before the May 30 Budget bore little resemblance to what what was ultimately imposed.

He argues that there was no mention of the “sliding scale” system, where revenues attract a higher tax rate the more a web shop earns, while officials spoke of a 5 percent levy on patron “winnings” - not one on deposits and over-the-counter (OTC) lottery sales. The latter was the option selected in the Budget and, as a result, Mr Bastian is branding his May 14, 2018, meeting with Dr Hubert Minnis, two Cabinet officials and senior Ministry of Finance officials as “meaningless” because the proposals discussed were markedly different from the 2018-2019 Budget announcement.

Besides Dr Minnis, others present included Dionisio D’Aguilar, minister of tourism with responsibility for gaming; Brent Symonette, minister of financial services, Immigration and trade and industry; Marlon Johnson, acting financial secretary; and Viana Gardiner from the Prime Minister’s Office.

“At the meeting, [Mr] Johnson said that the Government wanted to increase taxes on gaming house operators for the 2018-2019 Budget,” Mr Bastian alleged.

“The Government represented that it was proposing to increase the 11 percent tax on gross gaming revenue by two to three points; transfer to the Government the 2 percent of gross gaming revenue for community rehabilitation and charitable causes; and to introduce a 5 percent tax on all patrons’ winnings.”

While the Island Luck chief was invited to respond to these plans, Mr Bastian alleged: “In that meeting, the Government never disclosed that a sliding scale of 20 percent to 50 percent of taxable revenue was being considered.

“Therefore, I never had an opportunity to address it, which led me to believe that I had been misled during that meeting to which I had been invited. My legitimate expectation in a proper consultation was dashed.

“The consultation was meaningless, as I could not have given an intelligent consideration of, and an intelligent response to, a proposal that was never presented to me at a formative stage. I learned about the sliding scale tax and the patrons’ deposit tax two weeks’ later on May 30, 2018, during the Budget presentation.”

Under the “sliding scale” tax structure, web shops pay on each portion of their revenue:

  • Up to $20 million in revenue, a rate of 20 per cent.
  • Between $20 million and $40 million, a rate of 25 per cent.
  • Between $40 million and $60 million, a rate of 30 per cent.
  • Between $60 million and $80 million, a rate of 35 per cent.
  • Between $80 million and $100 million, a rate of 40 per cent.
  • Over $100 million, a rate of 50 per cent.

Mr D’Aguilar said five out of seven web shop operators fell solely in the lowest 20 percent category, while for a sixth, only a small portion of its revenue fell into the 25 percent category. Only Island Luck, the market leader, whose revenues will attract all tax rates.

Mr Bastian, meanwhile, said he warned the Government that the new and increased taxes would have unintended consequences for the industry.

“I... cautioned the representatives of the Government that any increase of taxes on gross gaming revenue, or any direct tax on patrons’ winnings or patrons’ deposits would be reckless without prior empirical study and technical advice,” he alleged, “and may have the unintended consequences of reducing the gross gaming revenue of licensed gaming house operator and channeling gaming patrons into the growing unregulated gaming market.”

Mr Bastian said he shared several international studies with the Prime Minister, and his fellow ministers, on “optimal tax rates and different tax methodologies, consistent with best international best practices from many of the regulated jurisdictions for online” gaming.

The Island Luck principal is arguing that the Gaming Board and minister of finance, K P Turnquest, “had a duty to act fairly, reasonably and consult” the web shop industry on any changes impacting their gaming control systems and platforms.

He also asserts that the sector had “a legitimate expectation that” it “would be consulted and treated reasonably and fairly” relating to any tax matters, and not doing so would be “irrational and unfair” given the implications for compliance with the Gaming Act 2014 and accompanying regulations.

The Government on Friday agreed to postpone implementation of the 5 percent patron tax until Island Luck’s, and three other web shops’, separate Judicial Reviews are heard by the Supreme Court on October 5. The “sliding scale” structure, which took effect from July 1, has also been postponed.

Comments

BMW 2 months, 2 weeks ago

Playing stupid! I knew of the sliding scale long ago.

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TalRussell 2 months, 2 weeks ago

Speedy Immediateness should be main objective Island Luck's Principal Comrade Sebas to hightail his way up driveway Her Excellency's official residence atop Mount Fitzwilliam, so request governor-general, to immediately dispatch by Royal Pigeon Mail - a letter begin makes its way reach the Queen 5,298 miles across Pond - for Her Majesty read, how members Imperial red shirts cabinet - have misled the Numbers Man's on Web Shop Taxes.

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birdiestrachan 2 months, 2 weeks ago

What he did not know is that doc is a stranger to the TRUTH.

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TalRussell 2 months, 2 weeks ago

I could be transformed into state utter shock to learn that Her Excellency The Governor General, has not consulted across the pond with best British King's counsels on her unlimited royal power to fire the comrade prime minister, or if she deems be - to fire the entire Imperial red shirts cabinet. Could Her Excellency be Minnis's and KP's, by royal order - undoing?

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Gotoutintime 2 months, 2 weeks ago

Tal---I was always under the impression that the Governor General served at the pleasure of the Prime Minister.--I am working my way into senility so please correct me if I am in error!

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TalRussell 2 months, 2 weeks ago

Ma Comrade GotOutInTime, tell the Australians they have be stuck with their prime minister - for the record - Australia (also a Commonwealth member country) has changed its PM, 5 times in a single decade.

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Gotoutintime 2 months, 2 weeks ago

Australia is much too far away for me to worry about---I think Minnis can get rid of Lady P at any time!

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TalRussell 2 months, 2 weeks ago

Comrade, believe me, Her Excellency Marguerite, can fire Minnis and the entire Imperial red shirts government by the mere royal stroke her pen - even without consulting with the Queen or anyone else - or any other constituted individual or body in or outside the Bahamaland....nor does Her Excellency,need tell Minnis, nor his government members - why she fired them, she has such royal authority direct Motherland... regardless if written into we constitution or not.

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Gotoutintime 2 months, 2 weeks ago

Sorry Tal---With the greatest respect I must disagree---Lady P serves at the pleasure of the Prime Minister of the Bahamas and he can replace her at his convenience.

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TalRussell 2 months, 2 weeks ago

Absoultely, Minnis can replace Her Excellency but as long as she lives atop Mount Fritzwillim - she has such firing authority... PM cannot fire her after she moves fire him.

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Gotoutintime 2 months, 2 weeks ago

OK--I bow to your wisdom--Have a good evening and we will live in hope!

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TalRussell 2 months, 2 weeks ago

Ma Comrade, I am One Thousand percent correct. Like I've been saying some six months - I seriously doubt such discussions have not taken place between Her Excellency and the Queen, although she does not have consult with Her Majesty in advance the firing(s). The House cannot overrule Her Excellency Marguerite.

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John 2 months, 2 weeks ago

Shouldn’t the focus now be on growing the economy rather than trying to squeeze every last dollar out of successful businesses. Come on! Tourism is begging for attention all over the country. Just drive down Bay Street on any Sunday morning. This discrimination of taxing Bahamians more and foreigners less MUST stop. And it WILL stop because this new generation of Bahamians will NOT tolerate it. Minnis and KP should be building investor confidence and not listening to someone hiding in the background telling them to break (Bahamians) balls.

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OldFort2012 2 months, 2 weeks ago

Amazing how ignorant of the Constitution people are. Is it not taught in school? The Governor General is appointed by the Head of State. That is HM The Queen. She serves at Her pleasure. Minnis could no more fire her by himself as he can fly by flapping his arms.

He would have to ask the Queen. The Queen normally would never refuse The Prime Minister. But in this matter she would naturally consult with the Privy Council. Which basically means that Theresa May would decide. But probably she would have no interest in the matter either way and Minnis would get his way.

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