GAMBLING REGULATION AMENDMENT (WAGERING AND BETTING) BILL 2018
Mr PALLAS (Treasurer) (16:50:03) — I move:
That this bill be now read a second time.
Speech as follows incorporated into Hansard under standing orders:
It is with great pleasure that I rise to speak in support of this Bill, a Bill which will reform the wagering and betting taxation framework in Victoria.
This reform is about fairness; it’s about making wagering and betting entities pay a fairer share of Victorian gambling taxes.
The key driver for this reform is the significant growth in online wagering and betting over the last few years, much of which has been outside of Victoria’s wagering and betting taxation structures.
Currently, wagering and betting in Victoria is taxed on a place of supply basis. This means that operators pay wagering taxes based on where they are located, not where their services are actually used.
As it stands, only the Victorian wagering and betting licence holder, Tabcorp Wagering (Vic) Pty Ltd is paying Victorian wagering taxes, regardless of whether the customer is located in Victoria or in another state or territory.
Victorians spend approximately $1.2 billion annually on wagering and betting on horse and greyhound racing, sports and other events.
Increasingly, this wagering is with online corporate bookmakers licensed outside of Victoria, who are not captured under the current Victorian wagering and betting taxation framework.
This reform will align the Victorian wagering and betting taxation framework with the increasingly digital wagering and betting environment. It will level the playing field between all providers of betting services to people in Victoria.
The Bill will amend the Gambling Regulation Act 2003 and the Taxation Administration Act 1997 to replace the current ‘place of supply’ wagering and betting tax with a ‘point of consumption’ tax, where the tax liability will be determined by the location of the consumer rather than the operator.
This will ensure that all wagering and betting by Victorians, whether online or in person, will be captured by the Victorian wagering and betting taxation framework.
The net additional wagering and betting tax revenue retained by the State from the introduction of the Point of Consumption Tax in 2019–20, the first full year of operation, is anticipated to be approximately $30 million.
This Bill will introduce a Point of Consumption Tax (the Tax) to commence on 1 January 2019. The Tax will be payable by wagering and betting entities on the wagering revenue derived from customers in Victoria.
Many of these wagering and betting entities have been profiting from Victorian wagers and bets without paying Victorian gambling taxes.
The Bill provides that the rate of Tax will be 8 per cent of net wagering revenue derived from customers located in Victoria.
Net wagering revenue will be broadly calculated as gross bets and wagers taken less winnings paid for fixed odds betting, or commissions derived from facilitating wagers and bets for pari‑mutuel.
The Tax will apply to all wagering and betting entities, including the Victorian wagering and betting licence holder.
The Bill establishes that an annual $1 million tax free threshold will apply equally to all wagering and betting entities, or entities grouped for the purposes of this Tax. In the 2018–19 financial year, the annual tax‑free threshold applied will be $500,000 as the Tax will only apply in the second half of the 2018–19 financial year.
It is expected that the majority of smaller bookmakers who predominantly operate an on course business will fall under the tax‑free threshold.
These small oncourse bookmakers do not materially compete with the big wagering and betting entities but are an integral part of the race day experience and are part of the rich and colourful history and tradition of racing in Victoria and Australia. This Government is committed to keep this tradition continuing, allowing this unique feature at all race meetings.
The Bill makes the Tax a taxation law under the Taxation Administration Act 1997, which will provide for the general administration and enforcement of the Tax.
Part 2 of the Bill provides that wagering and betting entities that become liable to pay the Tax must apply to register with the Commissioner of State Revenue before the end of the first month in which they become liable to pay the tax. It will be an offence to fail to apply for registration without a reasonable excuse.
Wagering and betting entities that will are registered, or are required to apply for registration, will be required to lodge a return and pay the Tax to the Commissioner of State Revenue within 30 days after the end of each month. Failure to comply with payment of the Tax will result in interest and penalty tax under the Taxation Administration Act 1997 being applied.
The Bill introduces a number of grouping provisions for wagering and betting entities. This will provide for groups of wagering and betting entities to be liable for their aggregate net wagering revenue for the purposes of applying the tax free threshold. This will limit liabilities being split amongst corporate group entities to minimise their taxation liability.
Wagering and betting entities will be required to determine the location of their customers at the time of placing a wager or bet to calculate their tax liability.
The Government recognises that it may be difficult for wagering and betting entities to determine the physical location of customers in some circumstances. Wagering and betting entities will have the option to use alternative information to determine customer location.
The Bill enables the Commissioner of State Revenue to publish guidelines for determining the location of a person who makes a bet with a wagering and betting entity.
The Victorian Racing Industry
The Government has undertaken extensive consultation with key industry stakeholders on design considerations and potential industry impacts since the tax was first announced in the Victorian Budget 2017–18.
In August 2017, the Victorian Government released a consultation paper seeking views on policy design considerations and potential industry and customer impacts of a Point of Consumption Tax.
A considerable number of submissions were received in response to the consultation paper, and have informed the Tax design.
The Government also undertook extensive consultations with the three peak bodies representing the Victorian Racing Industry: Racing Victoria, Harness Racing Victoria and Greyhound Racing Victoria.
The Government is committed to the principle that the racing industry, collectively and individually as Codes, will be no worse off as a result of the introduction of a Victorian Point of Consumption Tax.
The Victorian Racing Industry is a major part of Victoria’s sporting and cultural landscape, and contributes $2.8 billion annually to the Victorian economy while supporting over 140,000 jobs and participants. The Government is committed to Victoria remaining the pre‑eminent racing state.
The Tax has been designed to reduce potential adverse impacts on the Victorian Racing Industry.
The Bill provides that the Government will contribute a proportion of the amount of wagering and betting tax received to the Victorian Racing Industry, at a rate determined by the Treasurer after consulting with the Minister for Racing.
This will represent a new source of funding for the Victorian Racing Industry, and at the commencement of the Tax this new Victorian Racing Industry Point of Consumption Tax Payment is intended to equal 1.5 per cent of taxable net wagering revenue.
The Bill provides that an amount equal to the balance of taxation revenue raised though the Tax — equal to the 8 per cent of the taxable net wagering revenue less the contribution to the Victorian Racing Industry — will be paid out of the Consolidated Fund into the Hospitals and Charities Fund.
The Government will continue to work with the Victorian Racing Industry to monitor any potential impacts of the Tax on the industry.
The Government will undertake a review of the Tax as soon as sufficient data is available. The Government has committed to the review being completed no later than 18 months after its commencement, and the Bill requires that the outcomes of the review be laid before each House of Parliament on or before 1 December 2020.
The review will include an analysis of the key policy parameters including the tax rate, the tax‑free threshold and any impact on the Victorian Racing Industry arising from the introduction of the Victorian Point of Consumption Tax. The review will look at the total impact of the Tax on the Victorian Racing Industry collectively, and also of the impact individually on the three racing codes which make up the Victorian Racing Industry. In light of the Government’s commitment to maintaining the pre‑eminence of the Victorian Racing Industry, the review will also consider the interstate competitiveness of the Victorian Racing Industry.
Based on the outcomes of the review, and consideration of the impact on the racing codes, the Government will determine whether any adjustment to the new Victorian Racing Industry Point of Consumption Tax Payment is required.
The Government will continue to work with other states and territories to extend a common Tax model to other jurisdictions. It is in everyone’s interest to harmonise the key elements of the tax across all jurisdictions as much as possible.
The Bill will enable the Treasurer to enter into agreements with Treasurers of other states and territories to facilitate the collection of and compliance with the requirement to pay the Tax.
The Bill provides that the State Revenue Office will be responsible for the administration and collection of the Tax, as well as other functions such as ensuring compliance.
This differs from the current arrangements where Victorian wagering and betting taxes are administered and collected by the Victorian Commission for Gambling and Liquor Regulation.
I draw the members’ attention specifically to clause 12 of the Bill. This clause of the Bill proposes to limit the jurisdiction of the Supreme Court to ensure that the legislative regime under the Taxation Administration Act 1997 applies to the Tax in the same way as it does in relation to any other taxation law. Accordingly, I provide a statement under section 85(5) of the Constitution Act 1975 of the reasons for altering or varying that section by this Bill.
I commend the Bill to the house.
Debate adjourned on motion of Mr M. O’BRIEN (Malvern).
Debate adjourned until Wednesday, 22 August.