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Legislative Assembly for the ACT: 2000 Week 11 Hansard (30 November) . . Page.. 3498 ..

MR HUMPHRIES (continuing):

rate applying to up to $20 million in profit. You can have a higher rate than places like the Northern Territory and Norfolk Island. I thought Ms Tucker would have supported the concept of having a higher rate of taxation and therefore a greater opportunity for the community to get some benefit from those sorts of activities happening in the ACT. At the high profit level there is a lower rate than at least the Northern Territory. But a business has to have a very high level of profit, over $20 million in a financial year, to be able to obtain the benefit of that lower rate.

Members should also be aware that the tax rates are determined on a monthly basis, and only for a single financial year at a time. This means that an interactive gambling operator would only benefit from the lower tax rates of 10 and five per cent upon reaching the appropriate thresholds in gross margins during the financial year. At the start of the next financial year all operators go back to the 20 per cent, so it is not cumulative. This type of sliding scale regime will attract those more reputable operators best able to demonstrate their commitment to the ACT and player protection overall. Large international companies have a larger market base overseas and better financial and technical capacity to meet the stringent regulatory regime in the ACT. Larger reputable companies also generally are committed to a longer term operation in the ACT.

Mr Speaker, I do not consider that the proposed tax scale is regressive and that it adversely affects small companies. With these sliding tax scales all companies will pay the same tax rates at the same level of profits. That is, all companies, big or small, pay 20 per cent of their first $10 million gross profit, 10 per cent of their next $10 million and then five per cent on all those profits exceeding $20 million in a financial year.

Existing regulation 12 of the Interactive Gambling Regulations requires that to determine the amount of tax a provider had to pay, he or she had to first calculate the ACT's component; then, if the player was from another jurisdiction, that jurisdiction's tax rate component, or if the player was from a non-participating jurisdiction, that jurisdiction's tax rate component. Then it had to be multiplied by either, if the game was a game to which a gaming act applied in the player's jurisdiction, the tax rate applicable to that game in that player's jurisdiction or, if there was no gaming act applicable to that game in that player's jurisdiction, 50 per cent. Clear as mud, Mr Speaker!

After all that, the ACT then had to repatriate the other jurisdiction's tax component back to the jurisdiction, providing that jurisdiction was a participating jurisdiction that had an agreement with the ACT and had applied for and received approval to operate that particular game that the player played in the ACT. In the simplest of cases of an ACT resident gambling online in the ACT, there is one tax rate on the gross profit from the game played if he or she played online pokies, then another if he or she played an online game of roulette, and then another if he or she played a game that was not a casino-type game or a pokie.

It is clear that those arrangements were unsatisfactory and that they have to be replaced with something that is more appropriate. That is what the regulation which Ms Tucker is now seeking to disallow actually achieves and I think it is inappropriate for it to be put aside in the way that she has suggested.

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