Fact: The nation's effective average gaming gross proceeds tax is 16 percent; Montana's is 15 percent. At least one state has a tax rate below 8 percent.One state has a gambling tax that is half the rate of Montana's. Others have lower rates and, yes, some have higher rates.
Mississippi has an 8 percent state tax rate, Nevada has a 6.75 percent rate and New Jersey's is 8 percent.
Montana's 15 percent gross revenue tax (levied on the difference between money paid into the machines and money paid out in winnings, before any other operating expenses are paid) is the highest levied on any industry in the state.
The problem is, such an all-encompassing, blanket statement--"Montana's gaming tax rate is low"--cannot be made without considering a number of other factors in a rather complex analysis. Can we, for example, say Montana's property taxes or income taxes are low? Or high? The answer is, "It depends..."
An individual tax must be considered in concert with other taxes levied in that jurisdiction and other economic factors and conditions present.
But to really gauge the appropriate level of any specific business tax--especially an excise, sales or gross proceeds tax, which Montana's gaming tax is--the best test as to its appropriateness is to examine a business's profitability after the tax is paid.
With Montana's licensed establishments operating with a small 8.5 percent margin--before income taxes, the cost of promotions and capital expenditures are deducted--it is clear any increase in the gaming gross proceeds tax would deliver a crippling blow to many of the family-owned businesses licensed for gaming. (Under Montana law, almost all licenses are owned by individuals who are state residents.)
The fact is, according to the American Gaming Association, average effective gaming gross revenue taxes nationally are 16 percent; Montana's is 15 percent. And, since Montana has relatively high income and property taxes, licensed gaming operators are already carrying a hefty tax burden estimated at a total of $74 million or almost $50,000 per business annually, according to a study conducted by the University of Montana's Bureau of Business and Economic Research in the fall of 2002.
Sources: Special Reports II,
published and distributed to 180,000 households state-wide, winter 2002 by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701; The American Gaming Association at [www.americangaming.org], Columbia Square, 555 Thirteenth St. NW, Ste. 1010, Washington, D.C. 20004-1109; telephone 202-637-6500; fax 202-637-6507; Montana Business Quarterly, Autumn 2002, Gambling Economic Impact Study "Montana's Gambling Industry: An Update," Bureau of Business and Economic Research, University of Montana, <[www.bber.umt.edu]>.