Even though data collected by the previous administration indicated that the government could collect as much as $40 million in taxes from web shops, an audit was never done to verify that projection, Minister of State for Finance Michael Halkitis said yesterday.
In 2012, Prime Minister Perry Christie indicated that the Ingraham administration had done research on the revenue that could be derived from web shops.
Christie later told Parliament that it was more likely that the government could get $15 million to $20 million in annual taxes from web shops if the sector is properly regulated.
The government now estimates that it will collect about $12 million from web shop taxes.
Halkitis said yesterday the projection is "conservative" to avoid recording a deficit. However, he added preliminary information suggests a lower revenue yield than earlier estimates.
"Around 2010 when the government was exploring legalization, it asked the web shops what their turnover was," Halkitis said. "[Web shop operators] said about $400 million per year.
"The government never did any audit or verification. So the discussion was that if you tax them at a rate of ten percent then the government would get $40 million in taxes.
"We have put in place a requirement that the shops verify their turnover by way of an audit to get an accurate picture of their turnover.
"We put a low estimate in the budget to be conservative just in case the audit shows a much lower turnover."
Several members of Parliament recently questioned the government on the projected revenue yield from web shops.
East Grand Bahama Member of Parliament K. Peter Turnquest noted that the estimates fall far below what was initially expected.
"How is it calculated and will there be a license fee in addition to this tax?" he asked in the House of Assembly during debate on the 2014/2015 budget.
Gaming Board Chairman Dr. Andre Rollins also questioned the projected revenue.
"A low tax rate and yield from web shops will only strengthen the public's view that a national lottery will be far more beneficial to the state's coffers and national development than the $12 million worth of revenue forecast in this budget," Rollins said.
"...The failure of web shop tax revenue to meet the public's heightened expectations will inevitably increase public demand for a national lottery, and such an outcome will most certainly be seized upon by the opposition in the run-up to the next general election as an initiative they intend to deliver," he added.
The Gaming Bill is expected to be tabled on Wednesday. However, Christie yesterday hinted at a possible delay in government tabling the amended bill.
The government has not indicated the rate that web shops will be taxed.

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