People hate tax. They will attempt to avoid it.
And so thousands of Canberrans have forsaken pubs which have to pay full federal company taxes and full ACT rates and other levies and flocked to clubs which pay little federal or ACT tax and which serve cheap food and booze.
In theory a club is a group of people with a community of interest pursuing a worthy aim. Before poker machines, that was the case. They raised money from chook raffles and the like. Then poker machines were permitted in the ACT, largely because huge sums were going across the border to Queanbeyan.
The clubs argued for special treatment saying they did wonderful things in the community, supporting charity and sport and the like. So clubs kept their largely tax-free status.
The poker machines boomed. Nearly $1 billion a year is poured through them every year. You would think that sport and charity would therefore be doing well. Not a bit of it.
For quite some time people suspected this. This week it was proved. Last year the Assembly passed a law requiring clubs to give full information about how much poker machine money goes to charity and sport in return. Now the Commissioner for ACT Revenue has issued a report. The result is a shocker. The clubs have been giving precious little to sport and charity and have been keeping large amounts for themselves and for political donations.
Out of the $950 million that went through poker machines only $2.2 million (0.23 per cent) went to sport and charity, plus some more in kind. Of course, winners were paid about 85 per cent of what went through the machines and tax and overheads took some more, leaving $86.8 million. Only 11 per cent of that ($9.2 million) left club doors to the world outside and was submitted in the returns to the commissioner under the new provisions of the Gaming Machine Act as “”contributions donated to a charitable organisation; for a charitable purpose; or for an organisation declared . . . as [being for] the benefit of the community”.
The new provisions have shone light into hollow logs.
What the clubs thought was “”charitable” or “”for the benefit of the community” was very different from what the commissioner thought.
The commissioner divided out political and union donations and donations which ultimately went to activities or infrastructure for members only.
Of the $9.2 million the clubs wound back to themselves more than $5 million and gave a further $1.3 million to their political mates. The commissioner in classic fiscal understatement said these “”are not necessarily falling within the specific provisions of the Act”.
I would put it more forcefully and say that most of the ACT’s 72 clubs are misleading the public by suggesting they do huge amounts of charitable and sporting work when in fact they do pitiful amounts, with very few honourable exceptions.
It is time to end the farce.
Clearly, the clubs cannot be trusted to give reasonable amounts to genuine charities and sport. At present the Gaming Machines Act does not demand that they pay a certain percentage of poker machine revenue to sport and charity. So they do what they like. The Government should at least strike a percentage. After all they can strike a minimum return to players of 85 per cent, why not a minimum return to charity and sport to justify the clubs’ tax breaks. At present, the percentage given varies from club to club. Some give nothing. The largest, the Southern Cross Club, gives only 7.5 per cent of its $11.9 million in net poker machine revenue to what it calls charity, sport and community purposes. And the lion’s share of that went back to club facilities. Only $135,745 in cash out of $11.9 million went direct to charities.
The Canberra Labor Club gave only $17,000 out of its $7 million in net poker machine revenue to real charity. Tuggeranong Rugby Union Club gave a pitiful $24,120 in cash to charities from $15 million. The Canberra Raiders Leagues Club is one of the worse. Out of pokies revenue of $1.4 million it gave a princely $50 cash to charity and $5,500 to sport.
Aside from the National Press Club and the Hockey Centre, no other club in my view, did the right thing by sport or charity in this town to warrant their tax concessions, according to the list in the commissioner’s report. Some of it is downright mean.
A lot of these clubs no longer perform the function of clubs. How can a club with 60,000 members pretend to represent a community of interest. It is just a pub with a tax concession.
The Government can make clubs pay a certain percentage of pokies revenue to players, why not force them to pay a set percentage to sport and charity. (Real charities, that is, not ALP election funding, the maritime fund or club infrastructure.)
Better still eliminate the federal and territory tax concessions altogether (with an exemption for clubs that do not have machines).
Hotels pay 35 per cent of net pokies revenue in tax; clubs pay slightly under 23.5 per cent. They should all pay 35 per cent.
It would raise $14.5 million extra from clubs which the Government could apply to sport and charity. Moreover, the Government would spend it under the Budget process, which would be more open than the clubs have been to date, and it would be a process subject to political feedback from community, which as we know from the Institute of the Arts incident can be pretty demanding.