Macau Casinos Deliver Enclave Government $9.5B in Tax Revenue Despite Recession
Posted on: September 16, 2019, 08:58h.
Last updated on: September 16, 2019, 01:51h.
Macau casinos generated MOP75.32 billion ($9.5 billion) in tax revenue for the local government in the eight months completed in 2019. That’s a 1.5 percent gain on the same period in 2018.
The uptick comes despite Macau gross gaming revenue (GGR) being down nearly two percent January through August. The Chinese Special Administrative Region is officially in an economic recession after the area experienced two consecutive quarters of gross domestic product declines.
So, how are the casinos handing over more tax money to the government?
GGRAsia explains that GGR and gaming taxes are not necessarily comparable, because “there is typically a delay between the point where GGR is recorded in Macau casino operations, and the point at which tax is registered by the Macau government as having been paid on such play.”
Data from the Macau Financial Services Bureau shows that five of the six licensed casino operators have their gaming win taxed at an effective rate of 39 percent. The exception is SJM Holdings, the company that held a monopoly on casino gaming in Macau for decades before the enclave was returned to the People’s Republic, which is taxed at 38 percent.
With two-thirds of the year in the bag, the Macau government has already fulfilled 77.9 percent of its projected casino taxes budgeted for 2019. The operating blueprint prior to the year beginning expected tax on GGR to come in at MOP98.23 billion ($12.2 billion).
With four months remaining, Macau casinos need to send $2.7 billion in gaming tax revenue to satisfy the government’s projections. To put the massive amount of money being gambled in Macau into perspective – and subsequent taxes being collected – the $2.7 billion with 122 days to go equates to $22,131,147 per 24 hours in taxes.
Though the gaming industry has topped that $22.1 million daily tax number through eight months, the final four months present challenges for Macau. SAR Economy and Finance Secretary Lionel Leong predicts the recession to last through the end of the year.
“Given the incessant increase in external uncertainty, it is expected that the local economy will continue to experience recessionary pressure,” Leong stated. “The government will closely monitor the impact of the economic adjustment on Macau society, particularly on the employment market, so that response measures can be taken in a timely manner.”
Time to Celebrate?
Another potential hurdle when it comes to casino win is the December 20th anniversary celebrating Macau’s return from Portugal to China.
The enclave will be packed with visitors, with the event headlined by China President Xi Jinping. But MGM China CEO Grant Bowie says the festivities could actually slow GGR, as more non-gaming guests will be occupying casino resort hotel rooms.
There are a lot of activities going on. But at the same time, some of the official engagements might mean that some of the visitation may actually go down because of such an important time in Macau’s history,” the MGM executive rationalized.
The unrest in nearby Hong Kong threatens to keep Xi away due to security concerns. But as of now, the president remains scheduled to attend the December 20 ceremony.
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