Inside Asian Gaming

INSIDE ASIAN GAMING | January 2012 20 O nly around one-third of the registered employed population in Macau is liable to pay income tax— and even then only at a maximum rate of 11%—according to an analysis conducted by Inside Asian Gaming . Workers in the crisis- hit European Union paying in many cases 50 cents on every euro they earn would probably be envious. The low number of taxpayers in Macau does arguably, however, create a disconnection between formation of public policy in the territory and public engagement in that process. If you’repaying for something directly, you jolly well want your money’s worth and will be diligent in calling to account those spending your money in your name. This lack of accountability is having— and is likely to have in the future—some profound implications on the development of economic and social policy in Macau. That in turn is likely to mean public apathy and political sclerosis in dealing with issues familiar to Macau casino executives and investors, such as timely and coordinated infrastructure development, and skills and training development for local people. In 2010, the Macau government had a budget surplus of MOP41.88 billion (US$5.24 billion)—a 22% increase year- on-year. During the same period, public spending rose by 14% to MOP79.64 billion. Much of that spendingwas on infrastructure, but about one tenth of it was on handouts to residents. This largesse reflects in part the expansion of the local casino industry and the tax harvest from it. Nearly 40%of Macau’s annual gaming turnover (as opposed to gross revenue, which is net of tax) goes to the government in gaming tax. The industry grew by 57.5% in gross revenue terms year-on-year during 2010 and 42% in 2011. But the authorities’ largesse also arguably reflects a spectacularly unimaginative, even timid, approach to public policy. The Macau government would rather sedate its own people with cash handouts than lead them in the challenge of moving up the employment value chain. Macau is not unique in having relatively big government at low or no cost to its citizens. Many oil- and gas-producing emirates in the Middle East levy no or very low income tax on their nationals. But in most of those Gulf states, there are well- developed policies aimed at economic diversification for the day the oil and gas runs out. Economic diversification policies are much talked about in Macau. Attempts are being made to implement some. One prominent example is the new University of Macau campus and technology business zone being built on Hengqin Island in neighbouring mainland China. But there isn’t the same incentive for diversification in Macau—despite the political backing Pandering to the Masses Macau’s population is heavily protected from economic realities— and the government seems to like it that way