Macau tax revenues have sharply declined as a result of the coronavirus’ impact on the casino sector but Secretary for Economy and Finance Lei Wai Nong said the government is not considering any tax breaks for the industry.
As part of his statement, the secretary indicated that local revenue earned from taxes on casino operations through the first two months of this year fell to a record deficit exceeding MOP40 billion ($4.9 billion). This shortfall was a direct result of the casino concessionaires having little to no business, due to Covid-19.
The local government recorded a tax surplus of MOP51.4 billion ($6.42 billion) in 2019, with MOP82.1 billion ($10.26 billion) in expenses and MOP133 billion ($16.61 billion) in revenue. Gaming taxes contributed the largest share of this total at MOP112.7 billion ($14.08 billion).
Those numbers look like a dream now, as the coronavirus virus led to a 15-day shutdown of casino operations during February. January, which already brought some virus-related volume declines, saw gross gaming revenue drop by 11.3% in comparison to the same month in 2019. Overall gaming revenue reached MOP22.1 billion ($2.76 billion) with the government collecting tax revenues of MOP8.8 billion ($1.1 billion).
Those were gaudy numbers compared to February, however, when total revenue fell by 87.8% from February 2019. That gave total revenue of MOP3.1 billion ($390 million) with gaming tax revenues reaching negligible numbers.
Lei noted that the government still has no plans to relieve the tax burden on operators. “For now, we do not intend to introduce any [tax] changes.”
Lei is the official responsible for direct oversight of the casino industry. He explained that the only way that tax breaks would occur is after a thorough review of Macau’s gaming laws. At least as of last week, Lei noted the city’s casino operators had not asked for tax breaks, but he didn’t confirm that this was still true as of Thursday’s press conference.
However, Francis Lui Yiu Tung, vice-chairman at Macau casino operator Galaxy Entertainment Group Ltd, suggested he believes something is in the works. “At present, we have not asked the Macau government on any [tax] concessions but we believe the government is already introducing a series of measures…for the community of Macau,” he said in late February.
Currently, some analysts believe that Macau can recover by the third quarter of this year, but it would take a lifting of restrictions on travel imposed by China and other regional governments. Until the epidemic is contained, those restrictions are likely to stay in effect.