Bar associations say government tax hike a losing bet

Members of the Barkeepers and Operators Association (BOATT) gather to protest before the Parliament sitting at Woodford Square on Abercromby Street, Port of Spain on December 9. - Photo by Faith Ayoung

THE TT Coalition of Bars and Restaurants (TTCOBAR) and the Barkeepers Owners/Operators Association of TT (BOATT) will meet Finance Minister Dave Tancoo today, December 11, to discuss what they say is the government's “drastic and illogical” 400 per cent tax hike on gaming machines.

Both organisations argue it will cripple legal operators, drive the industry underground and fail to raise additional revenue. In a phone interview with both groups on December 10, they maintain the real sector issue is chronic non-enforcement, not the current tax rate.

They insist proper enforcement alone could generate hundreds of millions of dollars without destroying small and medium-sized businesses. BOATT representative Satesh Moonessar told Newsday the association was “surprised” to receive a call from the minister’s office confirming the meeting.

“Since what happened in Parliament, we were surprised this morning by a phone call from the minister’s office.”

On December 5, the government used its majority in Parliament to pass legislation that, in some instances, provides for fines of up to three million dollars for persons engaged in illegal gambling, which the authorities have said is deeply intertwined with tax evasion, money laundering, prostitution, and drug trafficking.

Moonessar rejected government claims that low compliance among bar owners justifies the steep increase.

“If someone was not paying the tax at $6,000, how in God’s name are they going to become compliant now when you've raised it by 400 per cent? The excuse does not make any sense.”

He argued compliance has always been undermined by weak enforcement by past and present governments, not a refusal to pay. He accused enforcement teams of selectively penalising a few businesses.

“Right now, they are sending out enforcement officers who bully and pick on a few bars. They go to three or four bars and ignore the next hundred. That is why we have non-compliance.”

He said proper enforcement at the current rate could generate “an additional $300–$400 million”.

Going into today’s meeting, BOATT intends to warn that the proposed regime will “tax legal, law-abiding businesses out of existence.”

Moonesar stressed at least 50-75 per cent of bars will not be able to pay the increase.

“It’s like you're trying to tax people out of existence.”

He said recent government measures, including hikes in commercial electricity rates, landlord taxes, alcohol taxes and now gaming taxes, all disproportionately target bars.

“It feels like they are picking on us. Every single measure is hitting our industry from all directions. Noise pollution fines are coming next. You cannot use a broad-brush approach. It’s ‘Peter pays for Paul, and Paul pays for all.’”

Moonessar warned pushing machines out of legal establishments will fuel underground gambling, as he claims was seen during covid19 restrictions when he said, “Machines moved into back rooms and hidden locations.”

He said small and medium bars are deeply intertwined with community life. “Every citizen takes part in some form of bar activity,” adding unemployment will rise if businesses close.

“Vendors and small suppliers like oyster vendors, doubles men and food suppliers would also feel the impact.”

Responding to Prime Minister Kamla Persad-Bissessar’s comments that higher taxes and oversight are needed for a “lucrative, largely unregulated gaming sector,” Moonessar said the associations support revenue collection but not contradictory policymaking.

“All they had to do was collect tax that already exists. They would have raised close to $400 million. By raising taxes now, you will not collect it.”

While he stopped short of calling the measures an “attack”, he said it will cause significant economic hardship.

Legal action remains a possibility if no compromise is reached, though he stressed the association’s priority is consultation.

TTCOBAR: Tax must be reduced and paid quarterly

TTCOBAR said the association supports paying taxes and complying with regulations but wants a “fairer system” that includes a reduced rate and the option to pay quarterly rather than 100 per cent upfront.

“We are asking for a reduction in the unreasonable 400 per cent increase.”

He noted the gaming tax is the only tax required to be paid in full upfront. “All our other taxes are remitted quarterly. We want the same level playing field across the board.”

He said the association does not condone illegal gambling and has been educating members on how to comply.

TTCOBAR argued the government’s expectations for revenue collection are unrealistic. In its proposal to the Finance Ministry, the association recommended a 50 per cent reduction to encourage compliance, estimating this would bring in “at least $200 million a year.”

The group stressed a 400 per cent hike is either going to shut down the industry because people cannot comply, or operators will commit illegal acts, or simply remove the machines.

“The government isn’t going to get the revenue they’re expecting, not even what they were getting before.”

However, TTCOBAR said gaming is an essential revenue stream that offsets operating costs.

“A bar cannot make money by selling beers alone. Profit margins are very small, sometimes negative. Gambling revenue subsidises the business.”

The association also said public estimates of machine earnings are “completely off base”.

“The claim is a machine makes $10,000 a month. That is far from the truth. At a small bar, four or five machines together might make $10,000. So that’s only about $2,000 per machine.”

The representative reiterated the association urges full compliance, saying everybody must adhere to the law.

“The country needs money to run.”

But they believe compliance will rise only if the tax is payable quarterly and set at a realistic level.

“We want the government to give us the facility to pay tax quarterly so more people would comply. We are even prepared for an increase, but not an exorbitant increase of that magnitude.”

In a WhatsApp statement to Newsday, on December 10, Tancoo said there is significant tax evasion and fraud in the industry.

“Amusement machines were not registered for years despite being in operation and generating revenue for operators.”

The said revenue from these illegal operations, he said, was not reported to the Board of Inland Revenue. However, he said there is always room for discussions and conversations.

“As Minister of Finance, I am insisting this illegality be stopped and the tax evasion be redressed.”

Tancoo said the country had lost “hundreds of millions over the period because of known illegality. It cannot be business as usual.”

On December 9, bar owners gathered at Woodford Square before Parliament convened, accusing the Finance Minister of victimisation over the proposed bill.

About 30 bar operators gathered quietly, as protests are prohibited under the current state of emergency.