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Govt. forgoes Rs. 120 b from Packer venture: Harsha

2013 Oct 15

By Uditha Jayasinghe
Terming it the “greatest betrayal of the people,” UNP MP Dr. Harsha de Silva yesterday insisted minimum losses to the public from tax concessions to casino mogul James Packer’s US$ 350 million project would be in the range of Rs. 120 billion annually.
Referring to pictures carried in most newspapers on Monday of Investment Promotion Minister Lakshman Yapa Abeywardene and Packer smiling at each other, Dr. de Silva termed it as the “million dollar grin,” denoting the massive profits the latter would get from the Sri Lanka venture.


Under the gazette notification issued by President Mahinda Rajapaksa as Finance Minister in July, Packer’s project is being given a 10-year tax holiday with only 6% payable for the next 12 years.
The Australian Financial Review recently estimated that such sweeping concessions would result in US$ 1 billion in profits for Packer and Lake Leisure Holdings, who are floating the venture.
Pointing out that Macau has the largest gaming revenue in the Asia Pacific region, Dr. de Silva in his latest calculation told reporters that he had estimated only 5% of that annual gaming revenue would filter into Sri Lanka.
“That means revenue of about Rs. 300 billion. An entirely reasonable 40% of this, if taxed, would mean Rs. 120 billion for public expenditure,” he said.

 

To put this number in perspective, Dr. de Silva read out of the Finance Ministry tax collection data tabled before Parliament showing the first quarter of this year in which revenue from food taxes alone was Rs. 1.4 billion.
Questioning as to why taxes from casinos could not be used to relieve the cost of living burden on consumers, he went on to give more numbers such as the annual fertiliser subsidy (Rs. 37 billion), health (Rs. 95 billion) and education (Rs. 121 billion) expenditures, which Dr. de Silva argued could be augmented by tax income from gambling.
He also questioned as to why the Government had not regularised casinos and established a monitoring body despite giving the nod for around three large-scale gaming establishments to be set up in Colombo.
He went on to say new regulations under the Casino Business (Regulation) Act No. 17 of 2010 that have paid applicable levies continuously to the Department of Inland Revenue under the country’s Betting and Gaming Levy Act No. 40 of 1988 cannot be considered as legitimate.
“It’s like saying if a brothel pays taxes, it is therefore legal. That is not accurate. The relevant Acts clearly state that just because a casino pays taxes does not mean that it is legal. If Packer has access to a casino license through the Lake Leisure Holdings company, it must be tabled before Parliament on the day that the debate on tax concessions is held,” he emphasised, calling Minister Abeywardana for an open debate on the issue.
Charging that such casinos are not being shut down because of their political connections, the UNP MP added that he would also complain to the Australian gaming regulators about the oversights of the Packer deal.
“If Packer can get an Australian license, why can’t he get one from Sri Lanka?” the MP charged, holding up the 99-page Australian license held by Packer. The debate on tax concessions under the Strategic Development Act is to be taken up on 25 October.

 

http://www.ft.lk/2013/10/15/govt-forgoes-rs-120-b-from-packer-venture-harsha/

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