MACAU BUSINESS
The VIP gaming revenue, or revenue generated mostly
“I genuinely do not believe the government is going to keep the gaming tax at 34+5 per cent, or 39 per cent. I think it’s likely that they will increase it gradually, 2-5 per cent,
over a few years, or they will go ahead to take care of that shortfall… as the junkets are
basically, slowly diminishing as time goes by,” said gaming consultant Alidad Tash
gaming sector, particularly in the areas of money laundering and cyber security. For example, the by-law about the new organisational structure and manpower of the Macau Gaming Inspection and Coordination Bureau (DICJ) put forward earlier this year has increased the number of DICJ inspectors per casino from 0.8 to 1.5 and established a new IT department at the watchdog, the scholar exemplified.
Tax issue
For gaming analyst and former gaming executive Alidad Tash, the consultation paper did not directly and explicitly address whether there are changes to the current gaming tax rate, which might be essential in light of the dampened junket segment over heightened government control and other macroeconomic factors. The government has suggested in the document a possible five-year prison sentence for illegal deposits made in VIP rooms by players, and to hold concessionaires more accountable for the actions of junkets — the middlemen that entice gamblers to play in casinos and provide them credits to be settled later — operating under their roof.
by junkets, made up about 70 per cent of the Macau gross gaming revenue in 2013, and only about 40 per cent in 2019 before the Covid-19 pandemic hit, Mr Tash, the managing director at 2NT8 explained in the “FRC/ MBtv Debates” seminar. “In five to 10 years, the most optimistic view I’ve heard from the junkets is that they might go back to half of what they used to do, which is roughly about 20 per cent of the total gaming revenue,” the panellist pointed out. Given the heavy reliance of the city’s public finance on gaming tax receipts, which account for about 70-80 per cent of the total government revenue, the Macau authorities have to dig deep into the fiscal reserve in the past two years to achieve a balanced budget in the wake of the plunging gaming revenue over the pandemic. Currently, the direct tax on the gross gaming revenue of Macau casinos stands at a rate of 35 per cent, but there are other levies on casino gaming for the purposes of public welfare, social and cultural affairs, making the total tax rate on casino gaming at 39 per cent. “I genuinely do not believe the government is going to
keep the gaming tax at 34+5 per cent, or 39 per cent. I think it’s likely that they will increase it gradually, 2-5 per cent, over a few years, or they will go ahead to take care of that shortfall… as the junkets are basically, slowly diminishing as time goes by,” said Mr Tash. “There is a tax issue that has to be resolved.” Prof Siu from MPI highlighted the annual government
expenses average MOP100 billion at the moment while the other non-gaming sources of government income total MOP20-25 billion, meaning the remaining MOP75- 80 billion has to be supported by gaming tax receipts for a balanced budget. Putting the figures proposed by the academic in
perspective, the Macau annual gaming revenue has to reach at least MOP200 billion for a balanced budget, should the total gaming tax rate keep at 39 per cent. According to the gaming watchdog, the gross gaming revenue of Macau was MOP292.46 billion in 2019 before the Covid-19 outbreak, and the revenue plunged to MOP60.44 billion a year later. In the first nine months of 2021, the gaming revenue only recovered to MOP67.79 billion. “We’re addicted to gaming tax,” said another panellist José I. Duarte, who is a local-based economist and a senior analyst at Macau Business. “If we are to attack the junkets and the VIP sector and put some discipline… there will of course be some consequences in terms of tax [receipts] and we have to learn to live with less taxes and less leeways than we have nowadays.”
“Disturbed” relationship
The proposals made in the consultation document seem to imply the city’s “slightly distrubed relationship with gaming”, the economist added. “It’s like a very rich uncle that nobody loves too much but everybody loves the money he brings,” Mr. Duarte illustrated.
DECEMBER 2021 17
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