Posted on: August 30, 2023, 08:10h.
Last updated on: August 30, 2023, 08:10h.
General elections are coming to New Zealand this October in order to establish whether the Labour Party should continue controlling the government. If the National Party wins the majority, it envisions significant tax reforms, including a new tax on any gaming operator targeting the country.
The National Party believes that its primary rival is responsible for “economic mismanagement” that has led to “rampant inflation, huge increases in interest rates and a shrinking economy.” To put the country on the right path, it has promised a whirlwind of tax changes in order to drum up voter support.
New taxes on foreigner-owned real estate and the removal of current business tax breaks are on the table. Those changes, according to the party’s projections, could bring more than NZD1.2 billion (US$716 million) to the economy.
By taxing offshore gaming operators, New Zealand could pick another NZD179 million (US$106 million). However, the Labour Party believes the math doesn’t support that figure.
Making It Rain Money
In order to reach its projections on gaming tax revenue, the National Party would close a loophole that has allowed iGaming operators to freely cater to Kiwis. Currently, it’s not illegal for them to use offshore sites, but these are not regulated and don’t pay any taxes to the country.
Therefore, according to the party, the solution is simple – regulate the segment and force operators to start paying taxes. The Labour Party says it’s not that simple.
New Zealand Member of Parliament Kieran McAnulty, who belongs to the Labour Party, believes the National Party is wrong. He asserts that it has grossly miscalculated the money the regulated iGaming market could attract.
McAnulty, who also serves as the country’s Minister of Racing, puts the figure at about half the amount. He says the amount Kiwis spend gambling online through offshore platforms is around NZD300 million (US$179.13 million).
The New Zealand Lottery Commission and Tab NZ are the only two regulated operators in the country. Should New Zealand regulate the iGaming space, current offshore operators would pay a goods and service tax of 15%, perhaps more. If McAnulty is correct, what the government could earn would be capped at about NZD50 million (US$29.85 million).
However, there’s no way to determine a precise figure. It’s only possible to estimate the number of consumers using offshore sites, as there is no detailed reporting of their activity.
Discussion of creating a regulated online gaming market isn’t new – it’s been on and off for several years. However, given the change in global sentiment toward gambling, the pace is likely to increase now.
Time To Focus on the Working Man
The National Party, which currently holds a significant lead over the Labour Party in the political polls, feels the changes are necessary in order for the government to focus on the working man. It asserts that many people have to work multiple jobs in order to compensate for rising inflation and high taxes.
Making a few changes to existing tax laws, it asserts, would give the average household more disposable income. Its average is NZD120,000 (US$71,652), and the reforms would provide up to NZD500 (US$298.55) more per month for some households.
To make this happen, foreigners buying a home worth NZD2 million (US$1.19 million) or more would have to pay a 15% “foreign buyer tax.” This, asserts the National Party, would result in NZD740 million (US$441.85 million) in additional tax revenue each year. That, of course, assumes that foreign buyers still want to invest in Kiwi real estate should the change take effect.
The party would also bring to a stop a tax break the government currently offers on the depreciation of commercial real estate. This could lead to another NZD525 million (US$313.47 million) for the government.
Other tax reforms are included, as well. If the National Party’s plan achieves its goal and it drums up enough voter support to take over, it plans on introducing the changes across the board on July 1 next year.