NSW Government Considering Scrapping Tax Hike Amid Star’s Struggles

The New South Wales (NSW) government is mulling scrapping its planned increase to the pokies tax that was expected to enter into force in July and level the tax rate of machines at casinos with that levied at clubs and pubs.

Review the Impact on Casinos

The announcement from the new premier, Chris Minns, that taxing arrangements need to be sustainable hints that the NSW government is considering scrapping the planned tax changes announced in December.

At the end of last year, the former state government announced tax changes that sought to raise an extra AU$364 million ($245.7 million) into the state’s coffers over three years by leveling the tax on gambling machines at casinos with that levied on those in clubs and pubs.

Admitting that the tax hike is important to the state’s bottom line, the NSW government believes it would have a serious impact on casinos.

“We need to make sure that when we do impose a new tax in New South Wales, the ability to pay is there,” Minns told reporters from ABC News, explaining that the government needs to assess what the impact would be on employment, especially in areas that require high-skilled labor such as gaming and casinos.

The announcement comes just a day after Star Entertainment revealed it was experiencing “a significant and rapid deterioration” of operating conditions due to regulatory restrictions and a decrease in consumer spending.

Star said it would cut 500 jobs mostly from its Star Sydney casino and freeze the salaries of non-unionized staff in an attempt to achieve AU$100 million ($67.5 million) in annual savings as the business is staring down the barrel of an AU$1.3 billion ($877.5 million) loss.

Following the casino’s announcement, United Workers Union called on the government “to revise its proposed tax to prevent further jobs being cut at The Star Sydney” and the government has heard the call.

Tax Policy Lacking Due Diligence

Minns, who led Labor to victory against the Perrottet government in March, also criticized the former government for lacking due diligence in its tax policy, claiming that his government was “left with that legacy” after taking over last month.

The chief advocate for Alliance for Gambling Reform, Tim Costelo, does not believe that The Star should be made any concessions, adamant that “if they can’t make a profit without money laundering and praying on problem gamblers, they really should get out of business.”

The Star and its rival Crown were subjected to intense scrutiny and heavy financial penalties after inquiries into their licenses uncovered they enabled money laundering and had operational weaknesses. Star says that it would be going ahead with the job cuts regardless of whether they will face tax hikes or not.