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Gambling Tax Compliance

24 Jul 2018 10:20 AM | Eric Hopkins

In the last budget, the government stated that only 25% of those with gaming machines are paying the appropriate tax. There is a simple solution to this.

This is an enforcement problem. Enforcement requires two things: knowledge of how many machines are in an establishment and knowledge about how many the establishment is claiming to tax authorities. It is expensive and difficult for the tax authorities to monitor the many establishments, some of them quite small. Most taxes are based on self reporting with a low percentage of audits to incentivize honest self reporting. Moreover, Trinbago is increasingly corrupt so the chance of collusion between the gambling establishment and the auditor is non-trivial.

One approach that could work is to make the list of members clubs and their registered number of machines by type publicly accessible. This should be a simple web interface. Second, there should be a reward scheme where anyone attending a members club and noticing the number of machines gets an reward for reporting the any underpayment to the authorities. This reward could be all or a portion of  he fine members clubs have to pay for under reporting.

By crowdsourcing this function, the government can drastically improve compliance. This will also be a fairer policy where the overall rate may fall as more members clubs join the rolls. It also has the added incentive of reducing the likelihood of collusion between the tax collector and the gambling establishment.

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