FINANCE Minister Omar Davies has signed a provisional tax order for the levy a 15 per cent tax on lottery winnings, but it remained unclear yesterday when the tax is to be implemented.

The finance minister's latest proposal represents a shift from his initial plan to apply the 25 per cent general consumption tax (GCT) on lottery purchases, which would mean the tax would kick on all lottery sales. An upshot would be lower jackpots offered by the companies.

Davies was unavailable yesterday for comment on the order, signed on July 7, a copy of which has been obtained by the Sunday Observer.

HOO... to give counter-proposal Wednesday

Officials of the two companies which operate lotteries here, Supreme Ventures and the Jamaica Lottery Company (JLC), declined to speak on the issue at the weekend, apparently preferring to wait until after a meeting on Wednesday of Parliament's taxation committee where the issue is likely to be aired.

In fact, Paul Hoo, the president and a principal of Supreme Ventures, is expected to testify before the committee on Wednesday, outlining his firm's counter-proposal to the GCT idea.

"To make a statement would be to pre-empt my proposal," Hoo said.

Said Howard Mitchell, the JLC's chairman: "We have not completed our analysis of the full impact of the law."

Jamaicans last year wagered an estimated $14 billion on lotteries, with an estimated $12 billion spent on games run by Supreme Ventures.

MITCHELL... analysis of tax impact incomplete

Already the Government takes 23 per cent of the gross sales on weekly lotteries and 17 per cent of the sales on daily or instant games. Additionally, the companies contribute 7.5 per cent of sales in "good causes" taxes, which support things such sports, health and education. Another one per cent goes to the Betting, Gaming and Lotteries Commission (BGLC), which polices the industry.

In May, Davies, having, in the face of sharp outcry from interest groups, withdrawn the application of the GCT to some pharmaceutical and farm inputs, announced instead that the value-added tax would be levied on gambling. Davies projected to raise $2 billion from this source, twice the amount that he was giving up on the pharmaceuticals and farm inputs.

There was a revolt in the gambling industry and Davies appears to have shelved the idea of GCT on horseracing, whose officials warned that the tax would lead to a rise in illegal betting.

But the July 7 provisional tax order signed by Davies, to amend Section 59 of the Betting, Gaming and Lotteries Act, suggested that the minister intended to go ahead with a tax on lotteries.

Said the provisional law: "A levy (to be known as lottery winnings levy) is imposed at the rate of 15% on the lottery winnings on a winning ticket in a lottery promoted by a licensed promoter."

Davies has the power to introduce such provisional tax laws for several months before they have to be regularised by Parliament. It was not clear how much additional revenues the Government expected to earn from lotteries.

The Government, in the mid-1990s, introduced personal income tax -- at the applicable rate of 25 per cent -- on lottery winnings, but removed it in 1999 in favour of a front-loaded levy.

At the time, the Jamaica Lottery Company was the sole player in the market and its officials engaged in a big public debate with the BGLC's then chairman, Gordon Robinson, over the efficacy of the tax and whether it would negatively affect bets.

But with the advent of the Supreme Ventures in the past three years, with games culturally attuned to the informal gambling schemes operated in Jamaica, wagering in lotteries has rocketed.

DAVIES...signed provisional tax order

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