The ACT government's decision to increase taxes on betting operators has backfired, costing millions in expected revenue, a new report reveals. The tax hike, introduced in 2021, was intended to raise additional funds for community services, but instead has driven betting companies to reduce their operations in the territory, leading to a significant shortfall.
Revenue Shortfall Details
According to a report by the ACT Auditor-General, the government expected to collect $11.5 million in additional revenue from the increased betting tax in the 2022-23 financial year. However, actual collections fell short by $4.2 million, with the government receiving only $7.3 million. The shortfall represents a 36% miss on projections.
The tax increase raised the rate from 10% to 15% on betting turnover, making the ACT one of the highest-taxed jurisdictions for betting operators in Australia. The report notes that several operators responded by reducing their marketing and promotional activities in the ACT, and some even withdrew from the market entirely.
Impact on Industry and Government
The revenue loss has implications for the ACT budget, which had already factored in the expected additional funds. The government has acknowledged the shortfall and is reviewing its tax policy. “The government is committed to a sustainable gambling tax regime that balances community expectations with industry viability,” a spokesperson said.
Industry representatives argue that the tax hike was too aggressive. “The ACT government's approach has been counterproductive,” said a spokesperson for the Australian Wagering Council. “Instead of increasing revenue, it has driven business away, reducing both tax income and employment opportunities in the territory.”
Comparison with Other Jurisdictions
The ACT's betting tax rate is now higher than in New South Wales (10%) and Victoria (8%), but lower than South Australia's 20%. The report suggests that the government should consider a more competitive rate to attract and retain betting operators.
The Auditor-General's report recommends that the government conduct a thorough review of the tax's impact and consider alternative models, such as a point-of-consumption tax based on gross profits rather than turnover. This approach, used by several other states, is considered less burdensome on operators and more stable for revenue.
Government Response
The ACT Treasurer, Andrew Barr, has indicated that the government will examine the report's findings. “We will consider the recommendations carefully and engage with stakeholders to ensure our gambling tax policy is effective and fair,” Barr said.
However, the opposition has criticized the government's handling of the tax. “This is a clear failure of policy,” said Liberal spokesperson for gambling reform, Mark Parton. “The government rushed through a tax hike without proper consultation, and now we see the consequences.”
The report also highlights that the tax hike may have unintended consequences for problem gambling, as operators may shift their focus to unregulated offshore platforms. The government says it is monitoring this risk and working with the Australian Communications and Media Authority to block illegal gambling websites.
