Online gambling costs South Africa millions in tax: casinos

Illegal gambling has cost the country around R110 million in tax revenue, affecting service delivery, the Casino Association of SA (Casa) said on Friday.

“South Africa relies heavily on tax revenue with 34 percent derived from personal tax and 20 percent from corporate tax,” CEO Themba Ngobese told a Sapa correspondent in a telephone interview.

“Any erosion of the corporate tax base means more burden for individual taxpayers. There is already talk of moving the VAT rate from 14 percent to 15 percent to inject an additional R16 billion into the economy.”

Adding value added tax (VAT) on zero-rated food options was also an option being considered.

Ngobese said the legal casino industry in South Africa contributed R4.5 billion in tax revenue to the government last year, a significant amount for a single business sector.

“Any erosion of this amount is a real issue for the country,” he said.

He cited the “aggressive” online gambling industry as one of the reasons why casino revenues had dropped from 10 percent growth in the 2012/13 financial year, to 0.6 percent in 2013/14.

While some of the reduced growth was related to a slow down in the South African economy in the past 18 months, Casa’s evidence suggested that illegal online gambling operators were targeting South Africans and taking revenue off-shore.

Casa estimated that at least five percent of the revenue contraction in 2013/14 was due to expenditure moving off-shore to illegal gambling entities.

“That five percent loss of revenue equates to R110 million less gaming tax revenue this year for the country,” Ngobese said.

Casa recently launched a campaign targeting online gamblers, operators, and service providers which was already beginning to produce results.

“We have already had some good reports to the provincial gambling boards about illegal operations which are currently being followed up by investigators in sting-operations,” said Ngobese.

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Online gambling costs South Africa millions in tax: casinos