NSW government to pursue casino tax increase
The New South Wales (NSW) government has announced plans to pursue a proposed rise in casino tax set out by the Australian state’s previous administration.
In December 2022, the existing government said land-based casino tax rates would increase with effect from 1 July this year.
This included the non-rebated duty rate rising from 17.91% to 20.25% and rebate duty rate increasing from 10.00% to 12.50%.
In addition, poker machine duty rate would switch from a flat 20.91% rate to a tiered system. This ranged from a 0% rate on machines making under AU$2,666 (£1,418/€1,658/US$1,813) a month, up to 60.67% for machines with over $12,000 monthly revenue.
At the time, the existing government said this could raise an additional AU$364.0m over the period from 2023-24 to 2025-26.
While the increases were not legislated, they were written into the budget and inherited by the current government as a legacy policy upon election in March. Since then, the government has held discussions with casinos about implementing the new tax rates.
To permit these conversations to continue, the government said that it plans to pursue the legislation following the forthcoming parliamentary winter recess.
Flawed approach
However, the plans have been met with criticism from some quarters. Robbie Cooke, chief executive and managing director of land-based casino operator Star Entertainment Group, branded the proposed increased as “flawed” and “not sustainable”.
“This proposed duty increase was policy on the run by the former treasurer, was ill-conceived with no consultation and had no regard to the capacity of our Sydney operation to afford the impost,” Cooke said.
“If implemented as originally proposed the additional duty would significantly challenge the economic viability of the Sydney business and put the jobs of up to 4,000 hard working Sydney employees in jeopardy.”
Cooke did note that Star appreciated the engagement of the government over the issue and said it would continue with talks regarding future legislation and changes.
“We will continue to engage with the new NSW government to guarantee the jobs of our team members while working hard to implement the significant reforms required to restore The Star to suitability and to ensure it remains a valuable contributor to the NSW economy.”
“Deteriorating” conditions for Star
Should the government proceed with the tax increases, it would pose another challenge to Star at a time when the business already faces a number of obstacles.
In April, Star announced it would engage cost and restructuring initiatives after it warned it is experiencing “significant and rapid deterioration in operating conditions”.
Star has been the target of multiple parliamentary inquiries into misconduct and had set out plans to restructure due to the compounding impact of regulatory operating conditions and exclusions. When combined with an “emerging weakness” in consumer spending, Star said it had led to this adverse environment.
The business also said that its Star Sydney casino – representing the largest single source of revenue for the group – “continues to operate in an uneven competitive environment” due to the impact of ending its junket affiliations.