Revenue needs drive potentially higher taxes on gambling

Thailand’s general economic slump has led to serious falls in tax revenues and with a series of expensive infrastructure projects set to start, the government needs to find ways of bringing in more revenue. One area being looked at more closely for its potential to bring in more revenue by the Excise Department is legalised gambling.

While the focus will be on horse racing, which, for example, takes place every Sunday afternoon at one of two racetracks in Bangkok, the Excise Department will also look at the levels of income it receives from the production of poker cards, which are produced by the state-controlled Playing Cards Factory.

At present the Excise Department collects 30 baht for every 100 poker cards produced by the Playing Cards Factory. From horse racing the department imposes a 20 percent duty on entrance tickets to racetracks and a 20 percent tax on the racecourse revenue from racing bets, after deducting winnings.

There is no tax on the twice-monthly lotteries, which have a far greater reach into the overall community than either horse racing or playing cards.

At present, the Excise Department brings in between 50 to 60 million baht a year from horse racing and another 20 to 30 million baht annually from poker card manufacturing.

The department has hired the dean of Rangsit University’s College of Social Innovation to look at which areas of legalised gambling can be taxed and which betting duties could be increased.

The study will look into the national lottery as well as horse racing, playing cards, cockfighting arenas and bullfighting rings, all of which are legalised under the auspices of the Interior Ministry. The national lottery would seem to have the greater potential for bringing in substantial revenues compared to the other forms of legalised gambling.

Horse racing in Thailand is hardly in a vibrant state at present with membership fees helping courses to survive. The Rangsit University dean has said he doesn’t believe additional revenue from the racetracks would amount to much and thinks a tax on profits should replace the tax on revenue.

The Finance Ministry set the Excise Department a tax revenue target for the 2014-15 fiscal year (which ends on 30 September) of 421 billion baht. In the first seven months of the fiscal year, to the end of April, the Excise Department had brought in 263 billion baht, exceeding its target by 5.9 percent.

Unfortunately, the Excise Department is the only tax collection agency which has managed to exceed its revenue target for the fiscal year so far. Excise expects to exceed its target by 20 to 25 billion baht overall, mainly due to higher excise tax on diesel fuel and increased revenue from the sales of cigarettes.