You can bet on a Gambling Levy in South Africa

We are reminded of the sugar tax that took effect on 1 April last year leaving a bitter taste in the mouths of industry. This tax was also introduced for philanthropic reasons due to the impact sugar has on chronic diseases such as diabetes and obesity.

In reality, producers of soft-drinks reduced their bottle sizes with no reduction in price to negate the effects on consumer spending. As a result, this tax exceeded revenue generation expectations, and there is little evidence to suggest that the tax had any progressive impact on public health.

Now with the impending implementation of a gambling levy – it begs the question, is this just another levy for our sins?

As far back as the 2011 Budget, Cabinet proposed a 15% withholding tax on winnings, which was later amended to a 1 percent levy on gross gambling revenue of the casino in 2012. There was no real traction since this announcement was made, however, the Minister has confirmed that the national gambling levy proposition with regards to the 1 percent levy is indeed still alive and well.

One wonders what will be done with the levy and where South Africans will see this money going. How successful will Government be in utilising these collections for gambling awareness and rehabilitation as proposed?

In addition, the practicality of the implementation of the levy should be considered. The levy will most definitely create an additional compliance and financial burden on the gambling industry.

It seems we will need to wait with bated breath for the release of the draft legislation due to be published for comment later this year.

Nicole Erlank & Mishka Fledermaus

Tax Consultants at Mazars