Casino Tax and Government Revenue Share
I have a question about setting up casino related data in the Implan model. When you set up the casino revenue, should I exclude the gaming related taxes or should I leave the taxes in before running the model. i.e. Gross gaming revenue = $150m Government Tax/share = $50m Net Gaming revenue = $100m. Do I input $150m on the revenue line in Implan, or do I input $100m?
Hello, Yes, if you are using the Hotel Casino Sector 499, you will want to include in Industry Sales the gross gaming revenue as IMPLAN will adjust out the taxes and other things. We recommend breaking this down further by finding a split between the hotel and the casino's revenue, and modeling the casino portion in the Gambling sector 495. Please let us know if you have any further questions.
I am breaking it down by sector and I am only referencing the casino portion that I am putting in the Casino Sector in Implan. The issue is regarding the state of Rhode Island. They have casino taxes can be as high as 75% of gross gaming revenue but normally averages about 40%. In your Rhode Island state files, do you have a state gaming tax rate that is that high? See the attached file for an example. I think the bigger question is why would you want to take out the government tax even within your models in the back end when the government tax portion should still be part of the total output as IMPLAN's definition of output is "the total economic value of the project in the local economy." To me, If you are running a business, the total economic value includes the total Gross Revenue as you purchase goods, services, etc. and make business decisions on a company that is a $50m (as is the example above) sized company as opposed to a $29.8m company as noted above.
Hello, 1) Industry selection: Following the Bureau of Economic Analysis’s convention, IMPLAN apportions the hotel part of casino hotel revenue to the hotel industry, the restaurant part to the restaurant industry, and the gambling part to the gambling industry. So, if you’re trying to model only gambling revenue, use the gambling industry (sector 495). 2) To clarify, IMPLAN does not “remove” any taxes. In general, when using Industry Sales as your Direct effect, you should use gross revenue (except in some instances using retail sectors). The model will apportion that Industry Sales value to intermediate inputs, which drive Indirect effects, and to Value Added, which drives Induced effects. Value Added includes Employee Compensation, Proprietor Income, Taxes on Production and Imports (TOPI), and Other Property Income (OPI). The Value Added measurements will include tax payments. Sales taxes and most property taxes, for example, are paid from TOPI, and corporate income taxes are paid from the Enterprise account, which is paid by OPI. Personal income taxes are paid from households, which are paid by Employee Compensation and Proprietor Income. So, in short, our Output, Intermediate Inputs, and Value Added data for casinos include taxes that would be paid by casinos, which will show up in the tax impact report (subject to the caveats mentioned below), and you should use gross revenue. 3) Tax Impacts: If the industry in question is taxed at an exceptional rate, which we will assume is the case in Rhode Island, then your tax impact results might not reflect the magnitude of the casino tax. If the casino tax is levied as a rate applied to corporate revenue (regardless of whether it is gross or net revenue), it would show up in the impact results as "Corporate profits tax”. The potential problem is that corporate profits tax is paid from the Enterprise account, which makes no Industry-level distinctions. So, the amount of corporate profits tax paid from the enterprise account will reflect a regionally-specific, but not Industry-specific, average effective corporate profits tax rate. Note that if the casino tax is paid from TOPI, we do have data for and apply Industry-specific TOPI rates, so the tax impact no longer would be an average across all industries. For more information about the tax impact report, see here: http://implan.com/index.php?option=com_content&view=article&id=419:419&catid=237:237 If your interest is in the taxes paid by the casinos, you will be better off estimating the Direct tax effect yourself and replacing IMPLAN's Direct tax impact results with your estimate. If, as assumed above, it is a pro-rata tax on corporate revenue, you would modify the amount reported as Direct corporate profits tax. Note that in that case, you will need to recalculate the total tax impact (Direct + Indirect + Induced). The Indirect and Induced tax impacts will be across many Industries, so the average-Industry effect does cause as much distortion. Note that this Industry-average issue affects only the tax impact report. Indirect inputs, Employee Compensation, and Proprietor Income levels will all be regionally- and industry-specific, and in principle will reflect the high tax rate. That said, if you have more specific data that you have obtained directly from the casinos, you should use those data in your direct effects. Please let us know if you have any further questions.
Hello Matt, Our response to your previous post may answer your question. http://support.implan.com/index.php?option=com_kunena&view=topic&catid=80&id=19429&Itemid=1840 Regards, IMPLAN Staff
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