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The
Straits Times, 30 Dec 04
Suggested
15% gaming tax is 'fair rate'
A PROPOSED 15 per cent gaming tax has turned out to be the most attractive
recommendation among the guidelines the Government has drawn up for
a potential integrated resort here. While not cast in stone and meant
as a working assumption for investors to do their sums, casino operators
and gaming experts contacted yesterday said that such a quantum of
tax on gross gaming revenue fell into the lower ranges of what other
countries levied.
'It is a very fair rate,' said Las-Vegas based gaming analyst Jonathan
Galaviz. Harrah's Entertainment senior vice-president (business development)
Richard Mirman agreed that it was 'reasonable', pointing to tax rates
in the United States, which range from about 7 per cent in Nevada
to as high as 50 per cent in Illinois. The gaming giant owns 28 casinos
across the US and is in the process of acquiring the well-known Caesars
brand. In the region, Macau has a gaming tax of close to 40 per cent,
Australia's ranges from 6 per cent to over 30 per cent depending on
the state, and South Korea's stands at about 30 per cent, experts
said.
Casino operators and analysts said a 15 per cent tax rate would help
make up for the expected fall in revenue that would arise from the
entry restrictions imposed by the Government.
Among other requirements, Singaporeans and permanent residents have
to be at least 21 years old and would have to pay a $100 membership
fee per day, or $2,000 annually. Mr Ronald Tan, a consultant specialising
in the hospitality industry and who has worked as an adviser to casino
gaming companies, said: 'The curbs can be quite serious dampeners.'
Mr Galaviz added that having a local market was 'symbiotic' with a
tourist one, as both allow for the 'feasibility of building a large-scale
resort'. The view was echoed by Mr Mirman: 'Restrictions reduce overall
demand by taking out a certain segment of the market. It is going
to be a challenge to build something of the same size and scale.'
But Harrah's, which previously indicated that it was prepared to pump
in at least US$1 billion (S$1.64 billion) here, still 'believes this
is a very viable business'. US gaming giants like MGM-Mirage, Harrah's
Entertainment and Las Vegas Sands, as well as Bahamas' Kerzner International
have all indicated keen interest in a Singapore integrated resort
project, even giving investment estimates of between US$1 billion
and US$2 billion.
Sources say the operators have teamed up with local developers to
submit proposals but none of the parties involved would confirm this.
It is said that MGM-Mirage and Kerzner International have teamed up
with CapitaLand, Harrah's Entertainment has partnered Keppel Land,
while Las Vegas Sands is said to be working with Hotel Properties.
Yesterday, Senior Minister of State for Trade and Industry Vivian
Balakrishnan said the Government will not subsidise the project, nor
will it take a stake in it. But he added that he doesn't speak for
government-linked companies, which are not part of the Government.
Although Dr Balakrishnan said he is ready to consider a resort without
a casino component, overseas experiences have shown that similar entertainment
hubs may not be economically viable if the casino component is removed.
'Revenue generated from the casino is used to cross-subsidise the
other non-gaming attractions, which in turn attract the large number
of visitors. These facilities leverage off each other and become viable
because of the high volume of traffic drawn to the wide range of entertainment
options available,' he said, pointing to the Atlantis model in the
Bahamas. Some 75 per cent of Atlantis' total revenues come from non-gaming
components like retail and dining.
But the gaming taxes, estimated to be 10 per cent of gaming revenues
collected by the Bahamas government last year, was US$23 million.
Aside from the competitive tax rate, another attraction is the exclusivity
period for licences awarded - preliminarily put at 10 years - which
would go some way towards restricting supply, said Mr Mirman. |
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