Ladbrokes Australia considers legal action over PoC tax

Ladbrokes Australia considers legal action over PoC tax

Friday, June 24, 2016
Dean Shannon said he was not consulted over the tax

Ladbrokes Australia chief executive Dean Shannon has warned of legal challenges and a hit to South Australia’s economy after the state announced plans to introduce a point of consumption (PoC) tax on betting.

Speaking to TotallyGaming.com, Shannon said that Ladbrokes is already considering its legal position should South Australia attempt to charge a ‘double tax’ through a 15-per-cent​ ​wagering tax on top of existing duties.

Shannon said that South Australia’s authorities, in particular Treasurer Tom Koutsantonis, failed to consult with the betting industry ahead of this week’s announcement. He added that the tax would negatively impact the betting market and South Australia’s racing industry, to which operators currently pay a 20-per-cent gross win tax.

“Should this tax be introduced between some bookmakers discontinuing product fee contributions and others pulling marketing, there is no doubt it will have a negative economic impact on South Australia, and that's before we consider the direct effect on the racing industry,” Shannon told TotallyGaming.com.

“There has been no industry consultation. If there was then Tom Koutsantonis would know that all the corporate bookmakers already contribute taxes to South Australia through product fees paid directly to Racing SA and 10 per cent GST, which we pay to the federal government which then gets distributed to the states. If we make a profit we pay company tax like every other Australian company. 

“If Tom has an understanding of this then this is a very odd quote: 'If betting companies are making profits from South Australian punters they should be paying tax in South Australia.' We are Tom.”

The budget measure is expected to reap Aus$9.2m (€6.2m/$6.7m) per year from​ ​companies based in South Australia and interstate. The​ tax will be based on place of consumption, hitting companies that have based themselves interstate and thus benefit from lower tax rates.

“The betting industry is rapidly changing and our tax regime needs to change with it,” Koutsantonis said. “By implementing a wagering tax based on the place of consumption, we are ensuring that businesses are paying taxes in the jurisdiction in which they are making their money.”

Shannon said that he disagrees with the principle of the PoC tax, questioning its legitimacy and whether it can actually be enforced.

He said: “It's nonsense and clearly demonstrates a lack of understanding by some SA state politicians. I actually don't think it applies to us based on this comment 'all bets placed in South Australia' as we do not have any servers or retail in SA. 

“We won't be double taxed. No business should have to endure that burden. We are considering our legal position. Failing that we will be in the unfortunate position of having to consider discontinuing our product fee arrangements with Racing SA once this PoC comes in.”

TotallyGaming.com says: “Authorities are consistently told to engage with interested parties when making or forging regulatory frameworks, something South Australia does not seem to have done.”

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