Page 6046 - Week 18 - Thursday, 12 December 1991

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MS FOLLETT (Chief Minister and Treasurer) (4.06): Madam Temporary Deputy Speaker, I present the Gaming Machine (Amendment) Bill (No. 2) 1991. I move:

That this Bill be agreed to in principle.

The Gaming Machine Act provides for the taxing and regulation of gaming machine operations in the Territory. Under the existing legislation, revenue from gaming machine operations in the Territory is obtained from both annual licence fees for machines and monthly tax on gross operating profit of machines. Licence fees are paid in advance for a year on the date of issue of each licence and on renewal each year on the anniversary of the grant of the licence. These renewal fees can amount to a quarter of a million dollars for the larger clubs and have proven to be onerous to many clubs operating gaming machines in the Territory.

The Gaming Machine (Amendment) Bill therefore proposes to amend the Act to combine the licence fees with the monthly tax scale. To compensate for revenue lost by the abolition of licence fees, the level of tax applicable to clubs and other gaming machine licensees has been increased so that the proposal is revenue neutral. Members should note that the proposed tax scale will continue to favour the smaller clubs with lower gaming machine profits. The benefit for all clubs operating gaming machines, and the reason why the proposal is strongly supported by the Licensed Clubs Association and the club industry generally, is that all their tax obligations will be linked to monthly machine takings, and conveniently related to licensees' cash flows.

As licence fees have been paid in advance for the current year, licensees will be refunded fees proportional to the unexpired period of each licence at 1 January 1992, when it is proposed that the new tax scale comes into effect. The Bill therefore provides for a slightly higher maximum tax rate for the remainder of the 1991-92 financial year to compensate for a loss in revenue due to the mid-financial year commencement of the changes.

The Bill also contains amendments to prevent profits from gaming machines operated by clubs from being distributed to private interests. Arrangements have become increasingly common whereby some or all of a club's profits, including those from gaming machines, are diverted to a private interest rather than to the benefit of members. Arrangements of this kind may result from a contract for a share of profits in return for management services or financial assistance. Alternatively, a privately owned organisation can take on enough of the features of a club to be recognised as such while retaining its original profit distribution through restricted voting power.

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