Supplier News
Panama – More layoffs as revenues decline in Panama
By Phil - 14 March 2016
The number of layoffs at casinos and gambling establishments in Panama continues to rise with industry experts placing the blame on a new tax and falling visitor numbers.
Since June 2015 a total of 1,200 workers have lost their jobs, 900 of these layoffs occurred after December 2015 while during the first two months of this year alone 300 people were made jobless.
Antonio Alfaro, President of the Association of Managers of Gaming (Asaja) told local press the downward trend is due to decreasing numbers of both foreign and local players and the implementation of a new tax which went into effect in June 2015. “The estimates we have indicate that attendance at gaming centres for locals has dropped by about 15 per cent, and among tourists by 20 per cent. Between January and May 2015 (before the application of the law), there were only 34 layoffs nationwide, now, in just two months so far in 2016, 300 people have been dismissed,” he said. According to Alfaro suggestions made by Asaja which would have seen the law modified so that the new tax would only be deducted on winning bets was ignored.
The tax is already having a direct effect on tax revenue generated by the industry. According to a report released by the Gaming Control Board (JCJ) in January gaming tax revenue in Panama decreased by a total of 14.4 per cent (US$13.8m) marking the end of a decade of increased revenues for gaming companies. Alfaro added that the losses in the sector amounted to more than US$10m in gross revenue, a situation which is currently having an increasingly negative impact on around fifty companies.
“Several of these casinos have been operating at a loss from mid-2015 and there are already two of them that have reported that, if the issue of tax is not resolved, then they will be requesting the suspension of the license for economic reasons,” he said.
However, the government has defended its decision to raise taxes in order to combat gambling addiction and raise US$60m of the US$74.8m needed to increase pensions. A 5.5 per cent tax now applies to all cash withdrawals made in casinos, slot parlours, bingo halls and sports betting shops and tracks. Tax deductions are made even if the customer cashes in chips without winning. Consequently, customers refuse to be asked to pay this tax above what they have already lost and so they prefer not to play.
