Only lottery winnings over $15,000 to be taxed
The Jamaica givernment yesterday announced a $15,000 threshold on lottery winnings, before the 15 per cent tax is applied, confirming Sunday's lead story in the Observer.
Finance Minister Dr Omar Davies admitted at a post-Cabinet news briefing at Jamaica House that the decision to tax winnings had led to a fall-off in sales of the popular "Cash Pot" game run by Supreme Ventures, while fuelling underground gaming.
Cash Pot sales, which generated $970 million in August this year before the imposition of the tax on September 1, dropped to $508 million for the month of October, with the illegal betting operators apparently raking in the difference, Davies said.
"Correspondingly as a percentage of total lottery sales in August, this fell to 75 per cent of a lower figure in October, with the trend continuing in November," said the finance minister.
The imposition of the $15,000 threshold was immediately welcomed by Supreme Ventures, but the company said it wanted to consult with the minister before the implementation of an alternative to the removal of the tax on winnings, which it said could hurt both the Government and lottery companies.
"We welcome dialogue with Minister Davies and are looking for an option that will be in the mutual interest of the industry and Government," said Brian George, CEO of Supreme Ventures.
The finance minister had hoped with the tax on winnings to raise an additional $220 million from the lottery industry to help fill out a $14-billion tax package that was announced in his April budget, and implemented in September.
But the tax contributed to a drop in sales and drove more people to illegal lottery operations.
The lower sales automatically meant a decrease in government's take and a drop in contributions to the CHASE Fund, set up to fund a range of "good causes", including health, early childhood education, sports and the arts and culture. The $58-million contribution to the fund in August dropped to $26 million in October.
Davies said yesterday that the finance ministry will, in the future, be leaning much more heavily on the Betting Gaming and Lotteries Commission, which undertook an analysis of the effect of the tax on the sector, for advice before making policy decisions.