BY VANESSA C. ROLLE Guardian Staff Reporter

The Government will seek to pass legislation to enhance Casino Taxation while amending the Lotteries and Gaming Act to legalise the regime under which taxation is paid, announced Minister of Financial Services and Investment Allyson Maynard-Gibson during her contribution to the Budget Debate in the House of Assembly.

She explained that the former Government was to introduce new legislation to effect such changes so that the Hotel Corporation of The Bahamas (HCB) would no longer "own" all casinos in The Bahamas.

"The new Casino Taxation would have meant additional revenues to the Treasury but would have meant removal of the one and only source of revenue for the Corporation," Minister Gibson explained.

The HCB, she said, have lost a total of $58.7 million in revenue from 1998-2002 because casinos have not been paying Casino fees, although Management Agreements remain in effect.

"The new taxation proposed should have led to additional revenue to the Government and would have recovered some of the loss of revenue to the Corporation," she said.

"Beginning in 1993, the former administration gave concessions in casino fees and in later years, completely removed fees which were the only source of revenue of the corporation. It was their declared intention to dissolve the HCB," said Minister Gibson.

Concessions were given to Sun International as well as the Ruffin Group which meant a substantial reduction in annual casino fees from $20 million to $8 million at one stage, she said.

The HCB has commenced a study of casino taxation in other jurisdictions to facilitate review by Government to ensure the profitability of casinos and equitable tax returns to the Government, the Minister added.

"The new taxation proposed should have led to additional revenue to the Government and would have recovered some loss of revenue to the Corporation. As the legislation was not passed, this revenue did not accrue to the Government and it is believed that the Treasury may have lost a possible $31 million in revenue during those dates previously mentioned. There was a corresponding benefit of as much as $31 million to the casino operators," she said.

Many of the casino operators are behind payment of casino taxes that should have accrued to the Treasury under the existing casino taxation, she said.

Such taxes were promptly collected when the HCB had control over casinos under various Management Agreements, she said.

Minister Gibson continued that "The philosophy of ownership of the casinos was one derived from the desire to ensure that the casinos are owned by capable and financially sound entities. It was thought that if the Hotel Corporation owned the casinos, the Government could ensure continuity of casino operations by finding another lessee of the casino in the event of an economic occurrence that threatened the operations of the casino such as bankruptcy, mortgage foreclosure, or unacceptable promotional activities by the Casino Operator," Minister Gibson said.

She said that it was felt that HCB ownership of casinos would cause due regard for tourism and employment. Also of note, she said, is that the present Government will continue to uphold the commitments of the former administration but will give its best effort to collect outstanding taxes. The government will, in consultation, pass legislation to legally effect policies.

Rising on a point of order, Member of Parliament for North Abaco, former Prime Minister Hubert Ingraham, asked the Minister to explain if she meant that the HCB is no longer the legal owner of casinos in The Bahamas " and if so, can she tell me when that happened."

Minister Gibson said that she was not suggesting that at all, and she explained that the policies of the administration had not been legally put into effect.

She said that since the Hotel Corporation has not been dissolved, then obviously it still legally owns the casinos.

"There is confusion, however in the industry and we will consult with industry and pass the necessary legislation to legally effect policies," she said.

Rising on a point of order, again, Mr. Ingraham said that the casino taxes which are owed by casinos in Nassau, Cable Beach and Freeport are taxes due on the Casino Taxation Act of 1967 which came into effect long before the HCB came into effect.

"The Hotel Corporation has absolutely nothing to do with the casino taxes that are owed today to the public treasury and the Minister ought not to seek to give the impression that the Hotel Corporation is responsible or in any way connected to the non-payment of the taxes," the former Prime Minister said.

Minister Gibson rebutted that Mr. Ingraham missed the part of her contribution where she said that there was a decision made on the policy implemented, although not legally, that casinos need no longer pay for fees to the HCB which resulted in a decrease in revenue to the Government.

She said that when the HCB had control the taxes were collected on a timely basis.

Mr. Ingraham jumped to his feet and stated that Government taxes were never collected by the HCB, but by the Gaming Board. Casino Management fees, not Government taxes, he explained, were collected by the HCB.

Minister Gibson retorted that at one time the HCB was in fact involved in the administration of the collection of those taxes.

"No, no, no, never," expostulated Mr. Ingraham.

Mrs. Gibson remonstrated, "Mr. Speaker, the point being made as is being exemplified by his (Ingraham) contribution is that there is now confusion in the industry and therefore the confusion needs to be removed by passing necessary legislation to legally effect the policies of Government."

Mr. Ingraham, rising on a point of order, again, said " If there is confusion, why is it that Kerzner International pays its casino taxes up to date to the public treasury. Because, they understand English and the law. Their taxes are paid up to date. Ruffin's is not paid and the casino in Freeport is not paid. Why?"

Minister Gibson responded " This administration will not be involved, at any time, in personal debate about any of the investors in this country. What we will do is effect legal policies to effectively and legally carry out the policies of Government."

Caption: ALLYSON MAYNARD-GIBSON

Posted Thursday 19 June, 2003