Club Report Predicts Death and Taxes

14 December, 2009 by

By Andrew Starke

The NSW economy will take a $1.6 billion hit over the next five years as the State Government’s poker machine tax increases on clubs reverberates throughout the state.

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This was the conclusion of a report prepared by KPMG – and commissioned by ClubsNSW last year – that assesses the financial health of clubs in light of the State Government’s significant increases in poker machine tax rates for clubs.

The report estimated that by 2014, the effect of the poker machine tax increases combined with the downturn caused by the indoor smoking bans could result in:

• An approximate decline of $1.6 billion in gross state product (GSP),
• An approximate average of 3,912 jobs lost in the NSW economy annually,
• 190 clubs may face the prospect of closure in the period to 2012 (105 clubs have already, closed or amalgamated since the tax rates were increased in September 2004),
• Club contributions to community groups and charities may be reduced by between $219 and $343 million over the period to 2012.

ClubsNSW Acting CEO, Anthony Ball, said the report was compiled using data from Government and more than 500 clubs.

This included the financial records of clubs who volunteered their books for analysis and interviews with their staff.

“This report shows that the tax increases forced on clubs by 2014 could cost the NSW economy $1.6 billion dollars,” said Ball. “By over-taxing, the government has actually hurt the NSW economy and their own financial coffers.”

“One hundred and five clubs have closed or amalgamated and 8,431 jobs gone from the Club Industry since the tax rates were increased. We will be seeking an urgent meeting with Kristina Keneally, asking that some of the tax increase be wound back.

“Even before the tax rates were increased, NSW clubs were already the third largest tax payer in the state,” he added. “Unfortunately, by overtaxing, the State Government has sent club employment, capital investment and support for community and charities into a rapid decline.”

Ball said the KPMG report showed that many clubs are now fast approaching a point of no return.