New Casino Constructions On Hold In Ohio As CAT Is Too High

The construction of new online casinos in the American state of Ohio is on hold as commercial activity tax in the state is too high. The tax has become the point of conflict between the Ohio Department of Taxation and the casino owners.

purtagal (I-Newswire) June 15, 2011 - New Casino constructions on hold in Ohio as CAT is too high. It was supposed to be very simple and low just like any other business, but it has become a major point of conflict between the casino owners and the Ohio Department of Taxation. The dispute is so heated that the casino construction projects in Cincinnati and Cleveland have come to a halt. Casino developers in the state were in regular touch of the officials and had expected them to define decent taxable revenue for gambling industry. But the imposition of high CAT simply derailed the work in progress. According to the casino developers, tax should be levied on the amount that a casino wins during bets and wagers, otherwise running a casino would be a bad investment with such a high rate of tax.

The old law related to gambling industry was too complicated. It was imposed in 2005. According to the new law, the commercial activity tax scheme should be simple with some decent exemptions. Instead it shifted the burden to the growing and new casinos in the state. Actually the CAT is 0.26 percent for every $10,000. The problem is not actually the rate of tax, but there is a disagreement between both the parties on what comprises the taxable revenue for casinos. According to casino owners, the tax should be levied on the revenue collected from the bets and wagers lost by the players. Other casino states including Illinois, West Virginia, and Pennsylvania base their taxes on the money won by the casino. This is a strong argument against Ohio Department of Taxation.

The taxation department of the state is in favor of levying tax on the total bets placed. A gambler can easily win $100 by betting and wagering with an investment of as low as $10. It would make really difficult for online casino owners to pay such a high amount of tax on low profits. Extra taxes can make run a project unprofitable or in loss. As the state is looking for extra funds, it has raised the taxes levied on the gambling industry. The burden is entirely shifted on to it because according to the new system the state has reduced taxes on manufacturing industry. Due to this, the casinos have to bear the burden and will have to pay higher taxes. This heated up the argument between the casino developers and the Ohio Department of Taxation.

The department of taxation of state is now supposed to take an action and define exactly what comprises the taxable revenue for online casinos. Now it is to be seen how things turn up in future and in whose favor the things fall.

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