Claims made by corporate bookies and others that a significant reduction in the betting operations tax (BOT) rate would lead to an overall increase in wagering revenues to Government have been dismissed as wrong by an independent report.
Treasurer Rob Lucas said that Treasury officials had long held the view that any potential reduction in the betting operations tax rate from 15 per cent to 10 per cent, or 8 per cent, would result in a net loss of revenue to Government, not gain.
The Department commissioned the South Australian Centre for Economic Studies at the University of Adelaide to conduct economic modelling of a change in the tax rate, which ultimately found the corporate bookies’ view that it would generate a 74 per cent increase in net wagering revenue as “implausible”.
“The Responsible Wagering Australia (RWA) argument that a BOT rate reduction would boost South Australian Government BOT revenues implies that everybody can win from a BOT rate reduction. But on the available evidence RWA’s position is simply not plausible,” the independent report says.
It concluded if the BOT rate was reduced from 15 per cent to 10 per cent, the most likely outcome for BOT revenues from non-SA TAB wagering service providers in 2020-21 would be $8.3 million.
“This is $6.2 million less than (the corporate bookies’) estimate of $14.5 million,” it says.
“If the BOT rate were reduced to 10 per cent, the most likely scenario in 2021-22 is that tax revenue would be… $4.2 million less than it will be if the tax rate is maintained at its current level of 15 per cent.
“If the BOT rate were cut to 8 per cent, the most likely scenario is a $5.8 million loss of tax revenue.”
Treasurer Rob Lucas said the report ‘blows out of the water’ claims made by corporate bookies and others who were found to have significantly over-estimated the effect of a price reduction on wagering activity.
“I am sure most people would have found it hard to believe any claim that by almost halving the rate of any tax you could actually increase the revenue collected,’’ Mr Lucas said.
“This independent report backs the view of Treasury officials, which is any reduction in the betting operations tax rate would result in a significant loss of revenues collected by the State.
“That would, of course, mean less money being available to distribute to the racing industry.”
Introduced by the former Labor government on July 1, 2017, the BOT is a consumption tax of 15 per cent on the net wagering revenue of betting companies offering services to SA customers.
All bets placed in South Australia with Australian-based betting companies are liable for the tax.