Industry did not request or receive preferential financial support from the Government!

Friday, 24 July 2020

Gambling organizers did not request fiscal facilities or dedicated subsidies, but the suspension of specific taxes for the period in which the activity was interrupted, a measure that does not exceed the strategy considered for other economic branches

We have recently witnessed an avalanche of opinions claiming that it was totally inappropriate to allow the resumption of gambling activity before other areas of activity or that the industry has benefited from favors from the government. Compared to theaters or churches, gambling starts with an image disadvantage and, unfortunately, the false competition between these three branches was fueled in the public space.

The most important aspect to consider in this debate is that the Government’s decision to allow the reopening of gambling venues was taken following extensive analysis performed by authorities and health professionals, evaluations which indicated that gambling activity resumption represents a low epidemiological risk. Moreover, given their strengthened position of unity in relation to the challenges they faced during this period, the professional associations representing the traditional gambling operators had an ongoing dialogue with the National Institute for Public Health (INSP) and had developed, even before the reopening of playgrounds, a set of safety measures to protect employees and customers and to prevent the spread of the SARS Cov-2 virus. The measures approved by INSP specialists have already been implemented in the game locations and take into account, in the most responsible way possible, the safety and health of players and employees.  In addition to these arguments, we also mention the fact that other European countries have already ordered the reopening of gambling facilities, listing here countries such as Austria, Germany, France, Bulgaria, Latvia, Cyprus or Switzerland.

In summary, the sanitary measures to which we refer include the provision of sanitary protective equipment (masks, gloves), the reorganization of gambling halls in order to respect the distance imposed by the authorities and the periodic disinfection of objects and common areas, carried out by employees. Moreover, allowing access only for customers who wear protective masks and providing them disinfectants, installing protection dividers between slot machines and ensuring adequate and periodic floor ventilation are other protection measures.

Government decision to allow the resumption of gambling activities tipped the state’s financial balance to +3.5 million euros per day

The second aspect to consider in relation to the need to resume gambling activity is given by the economic part of this sector. The gambling industry in Romania is an important contributor to the state budget. We are talking about an activity sector that provides 45,000 jobs, which is an important payer of salaries, taxes and duties, with a total of 600 million euros paid annually to the state budget for direct and indirect taxes and a collection rate of over 99%. By reopening this branch of activity, the state went from a daily expenditure of 1.5 million euros (representing the payment related to technical unemployment) to daily revenues of 2 million euros (direct and indirect revenues from taxes and duties).

“The traditional gambling sector has been severely affected by this crisis. It has been almost three months since gambling was banned. The negative effects of the lockdown period impacted us in different ways. We refer in particular to the 45,000 employees who had to be protected by the employers and who benefited from the technical unemployment measures offered by the Government. The companies had invested in the specialization of those employees over time, reason why they had every interest in protecting them. We also refer to the thousands of locations for which the reduction of rent was negotiated, but which were not exempted from its payment, in general. We are talking about the utility service providers that were still paid during the suspension of activity and we are also talking about the infrastructure of locations that had to be maintained and which generated expenses even during this period. Therefore, all these expenses were covered from own resources of the companies, even though these companies had zero receipts from March 17 (when the state of emergency was established) to June 15 (when the activity resumed)”, says Liviu Popovici, president of Romanian Bookmakers.

Contrary to what has been circulating in the public space during the recent period, the industry has requested only minimal support, not subsidies or other tax favors. Only the suspension of payment obligations was requested for the period in which the activity was suspended, a measure that we consider to be normal. The request of not paying taxes during the suspension period and giving companies time to recover is a measure similar to those considered for other economic branches.

“In pandemic conditions, the requests of professional organizations did not differ in anything and were not convincing. It was never a question of fiscal facilities or subsidies, but of normal demands from an industry completely paralyzed by the measures taken by the Government to limit the spread of the Covid-19 virus. The industry only supported the suspension of specific taxes on slot machines during the period when the activity was interrupted and established their payment on a monthly basis instead of a quarterly one, which can be beneficial to state budget. The resumption of the activity entails the payment resumption for all the taxes and duties. These taxes, not only that were not interrupted or reduced, but they must be paid in full, within the legal deadlines. We must not forget that the gambling industry is one of the most regulated and supervised economic activities in Romania and European Union, and the negative effects that the lack of temporary measures (correcting the imbalances caused by the suspension of activity during the state of emergency and alert) may have, may be unfavorable in terms of collecting taxes from the state budget, increasing of the unemployment rate and the appearance of similar activities carried out in parallel, but outside the law”, states Dan Schwartz, fiscal expert, managing partner of RSM Romania.

Author: Editor

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