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HomeMy WebLinkAbout2008-02-11 08-094 RESOLVEItem No. Date: 2-11-ce UH 094 Item/Subject: Resolve, Supporting the Recommxtatlons of Me Committee to Review the Taxation of Slat Machine Revenues. Responsible Department: Executive Commentary: After last years effort to Increase the taxation on slots was abandoned In the face of opposition, Governor Baldacci formed a Commitee to Review the Taxation of Slot Machine Revenue and changed the Committee with examining the current tae structure and to consider potential adjustments to simplify the system and enhance the effectiveness and stability of this revenue source. That Committee released Its Final Report In December, and we anticipate that the Legislature will begin reviewing it in the near future. The state currently uses a two tier tax structure. The first tier Is a 1% tax on "gross slot madrine income", i.e., all amoums that are bet The secoM is a lax of 39% on "net shot machine Income", i.e., the amount retained by the operator after winnings are returned. The coend report recommends retaining a two-tier tax structure but changing the base from Gross Slot Machine Income/Net Slot Machine Income to Gross Gaming Revenue/Adjusted Gross Gaming Revenue. Gross Slot Machine Income courts all amounts bet even those that are the result of electronic credits that players earn after initiating a session on a machine. Grass Gaming Revenue does not include such credits. To ensure revenue neutrality, this flees tax rate would be changed from 1% to 12.9%. The tier two tax, currently temaW Net Slot Machine Income, would be renamed Adjusted Gross Gaming Revenue; however, the basis for the tax would remain the same and it would be computed in the same way. The report recommends that the tax on Adjusted Gross Gaming Revenue increase from N% to 39.25%, with the additional .25% a "hedge" against changes In the payback percentage. If the payback percentage is increased, adjusted gross gaming revenue falls as would the tax received from It. Jon Johnson, General Manager of Hollywood Slots, has asked that the City of Bangor support the report and that our representative be preparetl to testify before the Legal and Veterans Affairs Committee of the Legislature in its favor. Deparbnent Head Manager's Cammenta: Recommend approval, as does Business and Economic Develo men City Manager Associated IMormation; Budget Approval: Legal Approval: City Scrichoor Introduced for X Passage _ First Reading Page _ of _ Referral Assigned to Councilor Blanchette February 11. 2W8 ° p9 -a 14 CITY OF BANGOR (TITLE.) Resolve, Supporting the Recommendations of the Committee to Review the Taxation of Slot Machine Revenues. WHEREAS, on June 1, 2007, Governor John E. Baldacci signed an Executive Order creating the Committee to Review the Taxation of Slot Machine Revenues; and WHEREAS, this order charged the Committee to examine the current structure of taxation and revenue sharing with respect to the slot machine operator and to consider potential adjustments to enhance the effectiveness and stability of taxation and revenue sharing in a way that would be both simpler and revenue neutral; and WHEREAS, the Committee has submitted a report oubming a series of findings and recommendations; and WHEREAS, the Committee has recommended that the Ter 1 tax, currently based on Gross Slot Machine Income, be replaced with a base of Gross Gaming Revenue and the tax rate be Increased from 1% to 12.9%; and WHEREAS, it has also recommended that the Ter 2 tax, based on Net Slat Machine Income, be replaced with a base of Adjusted Gross Gaming Revenues and the tax rate be increased from39%to 39.25%; and WHEREAS, these changes will better reflect the actual revenues retained by Hollywood Slots; and WHEREAS, they are also largely revenue neutral, producing approximately $160,000 more in taxes in each of the next two state fiscal years; and WHEREAS, these recommendations have been supported by Bangor Historic Track, Inc., the operator of Hollywood Slots in Bangor; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BANGORTHAT We support the recommendations of the Committee to Review the Taxation of Slot Machine Revenues and call upon the Legislature of the State of Maine to adopt these recommendations as presented. 29 CITY W ML Tehruary4L 2008 Motion Made avd Secaoded for Y sage Pea d kaaCIY # 08-096 ReSOLVg (fYl'L8)a - n Ro�nmwnA+[i mac a£ the Co®ittee'to Revien the Tazetion of AfsiQned to Countilo`r—�"