Volume Nine, Number Two    April 2004    www.columbiajournal.ca

Government May soon get More Cash from Gambling than Corporations


Marco Procaccini

Taxing accumulated wealth is being replaced by taxing risk and adventure, according to recently released government fiscal documents, and this has many economists and public interest activists warning about the danger of this trend.

The latest provincial budget is forecasting total government revenues from corporations at $873 million for the 2004-05 fiscal year. Meanwhile, revenues from gaming, lotteries and other forms of gambling have been forecast at $850 million. For 2005-06, gambling revenues for the government are expected to climb to $951million, while revenues from corporations will fall to $776 million.

“It’s not surprising given that there has been steady reduction in corporate income tax in recent years,” Says David Fairey, director of the Trade Union Research Bureau. “If we supposedly have a competitive economy, then corporate income taxes ensure costs are shared by the owners of capital, not just consumers.”

He adds that it is an economic fact that markets are created by wage earning working people as consumers, not corporations. If working people have to pay all of the taxes, they end up subsidizing corporations while reducing their spending power to stimulate the economy.

“The rightwing says there should be no corporate income tax at all; that it inhibits investment and the cost of the tax is passed on to consumer,” he said. “But since it is consumers, who are mostly wage workers, who stimulate the economy, and corporations mostly accumulate wealth, it makes more sense to tax that wealth than to further burden the consumer.”

Although Fairey isn’t opposed to taxing gambling activities, he is cautious about relying on it too heavily for public revenue. “Gaming revenue constitutes a voluntary tax on the working class. They are in a way like another consumer tax that tend to affect people who can least afford it.”

The lower mainland is becoming more of a hotbed for gambling activity, as at six municipalities are either considering or have already committed to expanded gaming in their jurisdictions. Vancouver, Richmond, Burnaby, Surrey, New Westminster and Langley have authorized the setting up of up to three thousand slot machine and six new casinos in the next two years.

This development has raise ire and controversy in all of these cities. Peter Rolston, of the Lower Mainland-based Multi-Cultural Coalition Against Gambling Expansion, says governments and politicians are being suckered by powerful corporate interests into believing that expanded gambling will generate better long-term revenues for local communities.

He claims numerous studies in jurisdictions where gambling is a large-scale venture show this isn’t the case.

“A recent study by McGill University claims that up to 15 per cent of gamblers risk serious addiction; the study also linked one suicide every two weeks in B.C. to compulsive gambling,” he said in a commentary on the Canadian Christianity web site. “We elect our councils to show leadership, not to pander to an addicted culture. B.C. already has 30,000 pathological and 90,000 problem gamblers; some individuals cost society well over $70,000 a year in bankruptcies, loan defaults, missed child support and increased health costs.”

The group has been working with some local church, labour and community organizations to lobby against any further expansion of gambling. “Despite the hype from governments and from the gaming industry, there is little long-term net increase in revenues from increased gambling,” he said. “Gaming is not a wealth generator, when we factor in the increased social costs organized crime, drugs, family violence and breakdown, health costs and policing.”

Fairey says taxing wealth and ecologically destructive practices, such as industrial waste and junk mail are far better ways of increasing public revenues. He adds that taxing gambling should be similar to taxing alcohol and tobacco purchases, in that the high tax rates—which refers to as “sin taxes”—are intended to discourage people from using these products, not to count on them for funding.

“If we tax pollution, it could encourage industry to reduce waste and look to alternative energy,” he said. “We get junk mail that we never asked for. Yet we have to pay for the disposal of the garbage through our taxes, while the companies that mail it out get to write off the expenses against their taxes. It’s perverse. We should be taxing it instead.”

However, both Rolston and Fairey agree that cash-strapped municipalities, hit by provincial and federal government cuts, are likely to continue to look to gaming as a way of rising money for local services and social programs.