The State of Victoria to Charge 8% Online Gambling Tax

The state government of the Aussie state of Victoria has recently announced that it intends to impose an 8 percent tax rate in online gambling companies operating within the state’s south-eastern borders. As is stands, the state’s online racing and sports industry are worth an estimated AU$1.2 billion – domestic gambling companies are, however, disadvantaged compared to foreign operators who have thus far managed to steer clear of paying taxes.

“Essentially you’ve got a situation applying at the moment where online gambling operators are effectively avoiding tax — they don’t pay a cent of tax when they are providing product into this state,” explains Tim Pallas, the Victoria state secretary, and treasurer. “They are not paying their fair share and have an unfair advantage against domestically based products.”

According to Pallas, the new tax directive is set to take effect on the 1st of January 2019 and is anticipated to raise about AU$30 million (which is equivalent to $22.6 million) in tax revenue annually for the state coffers. In addition to this, the operators will be required to put in place measures to ensure that the online bets being placed on their sites are from within the state of Victoria. The state treasurer confirmed that he and his counterparts are committed to ensuring that the online betting operators do not try to palm off their tax liabilities onto their customers using underhand and malicious book adjustments.

The proposed 8 percent tax rate is nearly half of the tax rate that other Australian states have already or are planning to implement – South Australia implemented a 15 percent Point of Consumption Tax rate in July 2017 with Western Australia and Queensland following suit with plans of similar tax rates.

Mixed Reactions

Stephen Conroy, a former member of the Australian Parliament and current head of the Responsible Wagering Australia (RWA), and his team have been lobbying for a tax that is below 15 percent arguing that the gambling companies were not yet profitable enough to raise the 15 percent in tax revenue. The lobbying for lower taxes also stems from the argument that the betting operators and gamblers are already paying a significant 10 percent charge.

However, while the RWA has not been opposed to Victoria’s new tax rate, Conroy has pointed out that the issue is not quite as straightforward as it may appear.

“The online wagering industry already pays a significant amount of consumption tax through the GST, as well as corporate income tax to the federal government,” Conroy said. “An 8% does not adequately account for these significant contributions and will result in Victoria having one of the highest effective wagering tax rates in the world.”

The statement implies double taxation but Pallas has been unrelenting to the concern saying that all the factors that may come into play have been taken into account. It seems Pallas’ main agenda is to keep the industry intact.

“The aim here is to make sure that we do no harm to the racing industry but we stop the leakage in revenue that should properly be the just desserts of Victoria,” Pallas said.