The ACT government ignored key planks of its own tax review in its decision not to boost poker machine taxes. The Quinlan tax review pointed out that gaming taxes in the ACT fell well short of taxes in other states and territories, and would need to increase by $20 million to equal the national average.
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ACT clubs pay about $34 million in poker machine taxes a year. The 2012 Quinlan review suggested boosting the tax take by about $9.5 million a year, through a new licence fee on each machine and higher taxes for clubs with big poker-machine earnings.
But the regime due to be introduced by Gaming Minister Joy Burch in May has no overall increase in taxes and provides a tax cut of about $18,000 for most clubs, paid for by the five biggest five clubs.
The decision not to boost taxes comes at a time when the ACT Government is facing unprecedented budget pressure, with a $770 million deficit expected this financial year.
But Clubs ACT chief executive Jeff House said an increase in taxes could threaten clubs' viability. It would be "economic folly" to hike taxes without regard for the situation the industry was in, he said. It would be "economic stupidity" to "tax clubs out of business" because fewer clubs meant less tax to government.
Mr House said the Quinlan review had ignored the "free fall" in club revenue and had treated clubs as private businesses rather than community organisations. Not even Mr Quinlan as chairman had accepted the key recommendation, he said.
Ms Burch also dismissed the Quinlan recommendations this week. When asked why taxes were not being increased in line with other jurisdictions, Ms Burch said that would be "explained in detail" when the package came to the assembly, probably in May.
The Quinlan tax review suggested a licence fee of $1000 a machine, which would encourage clubs to get rid of machines that were not economic. It suggested a big increase in takes for clubs earning more than $2.4 million from poker machines, to 25 per cent. Once clubs reached a threshold of $6 million, they would pay 34 per cent.
While it urged consideration of higher taxes, the review said the government should also have regard to the clubs' contribution to the community.
The bureaucracy has since modelled a new tax regime but Ms Burch won't release the results of their work, saying it is cabinet in confidence.
The tax system she plans to introduce for debate in May, to begin on July 1, has no licence fee. The tax rates are well below those proposed in the Quinlan report, with a top rate of 23 per cent kicking in only for clubs earning more than $7.5 million a year from pokies.
It increases the tax-free threshold to the first $300,000 of earnings, which delivers a tax cut to most clubs.
Mrs Burch said it was "a more equitable distribution of the overall tax burden with the highest-revenue-raising clubs paying more and the smaller clubs paying less tax or – in the case of 15 clubs – paying no tax".
The government is also introducing a new cap of one machine to 15,000 adults in Canberra, and this will allow about 4785 machines when it takes effect, compared with the present 4906.
But Mr Quinlan said this week "arbitrary" poker machine caps were not the answer. The way to reduce numbers was to provide a market mechanism, such as a licence fee on each machine.
"If there's a system that puts the decision back onto the clubs and makes it an economic decision then I think you'll get your result in terms of containment to a reasonable level without necessarily having this arbitrary number, which has its own problems," he said. "At this stage you've got clubs and club groups hanging on to their machines whether they need them or not, because once you lose them they're gone."
Mr Quinlan said the decision on taxes was for government, which also must consider the viability of the industry.
"They should get as much as they can out of it but at the same time we do not want to necessarily trigger further contraction of the club industry because it's the little clubs that fall out of the boat, it's not the larger groups," he said.
