Macau’s gambling tax soars as GDP stumbles

Macau's gambling tax soars as GDP stumbles

Macau's gambling tax soars as GDP stumblesWhile Macau may not have had the year it expected, with most months reporting slight dips in revenue, it hasn’t all been bad. The good news is that the tax revenue generated from gambling activities has helped to shore up the city’s coffers and was 0.33% higher through September than it was last year. That’s going to come in handy since Macau’s gross domestic product (GDP) is expected to drop this year, as well as in 2020.

Through September, Macau picked up around $10.6 billion in tax revenue. That’s not bad considering the drop in revenue that casinos have been reporting this year. The gross gaming revenue (GGR) was about $27.34 million over the same nine-month period, a year-on-year decrease of 1.7%. However, it should be pointed out that the two figures don’t always correlate on a month-to-month basis since GGR and associated tax revenue are often not recorded at the same time.

Last year, when it was preparing the budget for the current fiscal year, Macau expected to earn about $12.19 billion from gambling. As of September, it had already collected 87.2% of that amount and, if it stays on track, Macau should surpass its forecast. Gaming revenue taken in by the city over the first nine months of the year was 87.63% of the total – $12.25 billion – expected from all revenue sources.

That should prove to be extremely helpful for Macau’s operations going forward. According to the International Monetary Fund (IMF), the city’s GDP is going to retract by 1.3% this year, as well as another 1.1% next year. The predictions, published in an updated World Economic Outlook last week, are different from what was expected this past May when the IMF said that Macau’s GDP would increase by 4.3%.

The IMF didn’t provide a clear explanation as to why it expects a retraction next year. However, it points out that Macau’s economic growth began to see a drop in speed during the second half of last year, brought on by weaker investments and spending. This has been exacerbated in 2019 by the U.S.-China trade war, as well as a reduction in domestic consumer confidence in China.