CLUBS are getting an unfair tax advantage on their pokies income, the Productivity Commission has concluded.
In a report on the not-for-profit sector released yesterday, the commission criticised tax concessions on gaming income for clubs, saying they delivered a "considerable benefit" to clubs not available to hotels and other operators.
It found the concessions were a breach of competitive neutrality principles, distortionary and not justified by the argument that clubs re-invest their profits back into local communities.
"While clubs provide valuable community benefits through their support of community activities, the direct contributions fall well short of the concession," the commission found.
In Queensland, the gaming tax for licensed clubs ranges from nil for venues earning up to $9500 a month in poker machine profits to 35.91 per cent for clubs earning more than $1.4 million a month from poker machines.
All hotels pay the 35.91 per cent rate in gaming taxes, as well as a health services levy ranging up to 20 per cent of their gaming profits.
Former NSW treasury official Dr Betty Con Walker – author of the book Casino Clubs NSW: Profits, tax, sport and politics – said that meant many Queensland clubs would be paying less than half the tax of hotels which had the same gaming profits.
"It would be worth millions of dollars and that's money that Queensland taxpayers are foregoing," she said.
While Dr Con Walker also acknowledged that clubs contributed to their local communities, she said that taxpayers would be better off if clubs paid the same taxes as hotels did, allowing the Government to use that money to provide more community services.
But Clubs Queensland CEO Doug Flockhart disputed the suggestion that clubs were contributing less to their communities than the value of their tax concessions, describing it as "bogus".
"The concessional tax rates for community clubs allow them to provide facilities for communities that wouldn't otherwise be available," he said.
"Junior sport would fall over. You wouldn't have $2.4 billion in community assets on the ground. You wouldn't have, as was the case last year, nearly 52 million hours of active participation in sport, because frankly, you just couldn't fund it."
Issued by news.com.au February 12th 2010
http://www.news.com.au/couriermail/story/0,23739,26710064-3102,00.html
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