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The Andrews government is considering overhauling the way pokies venues are taxed after a local council accused pubs and clubs of widely abusing generous concessions designed to pump money back into local communities.
Hume City Council, in Melbourne’s outer north, says local pokies venues are claiming subsidies for Foxtel subscriptions, staff wages and free entertainment for members, instead of investing their profits into programs that benefit all residents.
Hume City Council mayor Joseph Haweil described the Community Benefit Statement as a rort that must be ended. Credit: Luis Ascui
The Victorian government on Friday night told The Age it was aware of the concerns flagged by Hume City Council and would review its gaming tax policy.
“It’s important that clubs invest back into the communities they’re hosted by, to ensure more people can benefit from the revenue they bring in,” a government spokeswoman said. “We are aware of concerns around gaming machine taxation and are considering them.”
Under Victorian law, gaming machine revenue at pubs, clubs and RSLs are taxed at a lower rate than hotels, but they are required to demonstrate they are returning 8.33 per cent of their pokie revenue to their communities.
Venues are required to lodge a statement that shows exactly how they are benefiting the community, either directly or indirectly, to claim the tax subsidies.
But Hume City Council analysis of pokies venues in its region shows most subsidy claims via the Community Benefits Statement over the past five years have been for operating costs, primarily wages and salaries.
Between July 1, 2017 and June 30, 2022, pubs, clubs and RSLs in Hume collectively claimed back $27.5 million – but only 16 per cent was spent on “direct” benefits to the community, the analysis found.
“This is a colossal rort of the purpose of the scheme, which is to allow clubs and pubs a tax write-off to provide some of their profits back into the community,” Hume City Council mayor Joseph Haweil said.
The pubs and clubs are not breaking the law, but Hume City Council says they are “widely abusing” the scheme to “legally minimise tax liabilities under the pretext of philanthropic, charitable or benevolent causes”. It called on the Andrews government to close what they say is a tax loophole.
“The government needs to tighten the loophole to say, ‘You cannot deduct general operational expenses’,” Haweil said. “In this fiscal environment we’re operating in, where everyone is required to tighten their belt, why aren’t pokies operators being asked to do the same?”
Under the Community Benefits Statement, pokies venues can get tax deductions for direct community benefits such as donations (Class A); indirect community benefits such as employee expenses and capital expenditure (Class B); and miscellaneous such as auditing expenses (Class C).
Some claims were for waste and removal costs, Foxtel subscriptions, staff expenses, the cost of maintaining turf, soft drinks given away to children and seniors and free entertainment for members, according to documents submitted to the Victorian Gambling and Casino Control Commission (VGCCC).
None of the sporting clubs that had gaming machines in Hume claimed expenses for providing services to help the elderly and young, housing assistance for disadvantaged people, or the treatment of problem gambling, and drug and alcohol addictions in the last financial year.
“Taxpayers are effectively subsidising pokies venues’ ability to attract new customers,” Haweil said. “We strongly believe this rort is occurring statewide.”
Premier Daniel Andrews is well-known in business and political circles for his close relationship with the liquor and gaming industries, especially the Australian Hotels Association (AHA).
Both Labor and the Coalition told the AHA and Community Clubs Victoria, which represents pubs and clubs, ahead of last year’s election there would be no upcoming policy changes that eat into gaming machine revenue.
However, in a softening of his long-held resistance to gaming reform, Andrews this year flagged he was open to the idea, including the introduction of cashless cards for the state’s 30,000 pokie machines.
Gaming Minister Melissa Horne told local councils the government was open for gaming reform. Credit: Joe Armao
Gaming Minister Melissa Horne this week wrote to Hume, Casey, Whittlesea, Greater Dandenong, Wyndham, Monash and Darebin councils, telling them she wanted to meet with them to hear about their concerns, which they detailed in a recent letter to her.
Locals in those council areas, some of the most socio-economically disadvantaged communities, collectively lost almost $1billion in this financial year, according to VGCCC data.
“I appreciate the concerns expressed in your letter about the level of gambling expenditure across Victoria,” Horne wrote in the letter seen by The Age. “As you note in your letter, the premier has indicated that the Victorian government is open to considering reforms to address gambling-related harm across the state.”
Gambling taxes, not including revenue from Crown Casino, will deliver $5.76 billion to Victoria’s coffers over the next four years, according to Treasurer Tim Pallas’ most recent budget, handed down on Tuesday.
Anti-gambling advocate Stephen Mayne said pubs and clubs were double-dipping, particularly given they are not taxed by the federal government the way casinos are.
“Why would you give them a tax break when they’re exempt at the federal level,” Mayne said. “[The Community Benefits Statement] has always been a rort, and it’s always been too loose. And it’s ridiculous it hasn’t been shut down after 30 years of rorting it.”
Hume councillors unanimously passed a motion on Monday calling on the state government to tighten the scheme.
The Victorian government spokeswoman said the 8.33 percentage point difference between clubs and hotels applied at the lowest tax bracket. She said at the highest tax bracket, clubs paid 60.67 per cent and hotels paid 65 per cent.
RSL Victoria was contacted for comment. Community Clubs Victoria declined to comment because its chief executive is on leave this week.
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