National online gambling tax would driver players to offshore platforms, warns FMF

The Free Market Foundation (FMF) wants National Treasury to withdraw its proposal for a 20% national tax on online gambling.

The tax would drive consumers to offshore online casinos, which already account for roughly 62% of all online gambling activity, the think tank warns.

In its response to Treasury’s draft discussion paper, it argues that this would cost government income, and cost the legal industry jobs.

“The assumption that it would be possible to enforce a tax on offshore platforms despite the absence of any mechanism or enforcement infrastructure is fundamentally flawed,” said Ayanda Zulu, FMF policy officer and author of the submission.

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Talking to Stephen Grootes, Zulu makes the point that online casinos remain technically legal in South Africa because the National Gambling Amendment Act of 2008 was never promulgated.

"They remain in a legal grey area and Treasury is basically saying in this proposal that we can tax those online casinos, many of which operate offshore, despite the absence of any mechanism or enforcement infrastructure because they aren't regulated."

He emphasizes that the proposed 20% tax is IN ADDITION to the taxes the legitimate industry already pays.

"What is basically being proposed here is a national online gambling tax of 20% on the gross gambling revenue of all gambling operators - this tax is going to be levied in addition to existing taxes that are already paid provincially, so that is another cumulative burden on an industry that is shouldering many taxes."

Scroll up to the audio player to listen to the Free Market Foundation argument