online craps casinos

Detroit Casinos Displeased Over Moves for Tax Increase

Posted on May 14th, 2011

News Sponsored by Online Vegas Casino

Rated 5 Stars by crapsonline.com

Read Review

Visit Casino

Download Software

————————————————

Casinos in Detroit expressed collective disappointment over the city mayor’s plans to raise gambling taxes from 10.9 percent to about three percent for each year. The proposed tax increase by Mayor Dave Bing came out as a measure to lessen the city’s serious budget insufficiency. Bing opened the matter among members of the Legislation a month ago. At present, government funds are $155 million short. A closer look at the city’s budget problems will show that matters are extremely serious. In fact, it is so serious that the state has mulled over the possibility of assigning an emergency manager to temporarily direct and handle the city’s funds. This elicited grave concerns from the City Council.

Apart from the tax increase, Bing’s proposal also includes other cost-cutting schemes to completely solve Detroit’s financial problems. The mayor said that the strategy prioritizes “attacking the structural issues of reducing pension and medical costs that are crippling the city’s fiscal stability”. The plan includes cutting pensions and lesser funds for health care for retirees. Exclusively for the tax increase, the mayor estimates that about $20 million will be earned by the city once the proposal is approved. Such amount will definitely boost the city’s funds. Initially, the Detroit City Council had dissenting views about the proposal. There were those who immediately conveyed their disapproval such as Andre Spivey, Kenneth Cockrel Jr. and Brenda Jones.

Councilwoman Joann Watson was among those who supported the tax increase. She feels that there is nothing to debate about, adding that Detroit’s residents have been giving casino businesses good income; therefore, casinos should return the favor. Saunteel Jenkins, also a member of the city council, has a different take on the matter. According to her, increasing the gaming tax in Detroit may cause the construction and operations of new casinos in other areas with lower government taxes. If such happens, Detroit would create more problems in the long run. Currently, Ohio’s casino taxes are 33 percent, but Indiana has lower taxes which are 15-40 percent.

Still, in spite of differences in opinion, the Council still passed a resolution that supported the tax increase. This resolution was signed after a full copy of the mayor’s budget deficit elimination strategy was provided to the Council. According to City Council president Charles Pugh, the document was able to explain the rationale and provide the details of the strategies that Bing has identified. Now that a Council resolution has been passed, the next move is to secure the approval of state lawmakers. However, fiscal analyst Irv Coley remarks that the latter will most probably have a negative reaction toward the tax increase proposal. The city’s three gaming establishments—MGM Grand, MotorCity Casino and Greektown— conveyed their disappointment and argued that the present scenario is already unfavorable and inconsistent as it is.

According to the Michigan Gaming Control Board, Detroit’s gaming facilities managed to take in $125.3 million last month. This reflects a decrease of 5.6 percent vis-à-vis March earnings. However, the amount was computed as 5.4 percent higher than the revenues of April 2010. When asked about how much they actually earned, after taking away all taxes and payables, the casinos refused to give a specific amount. However, it was apparent that business for them is doing good, inspire of the many financial problems Detroit is currently seeking to remedy.
A breakdown of the above figures shows that revenue increases from last year’s income were both enjoyed by MGM Grand who raked in $52.2 million, while MotorCity Casino earned $41.5 million. Out of the three, it was only Greektown which posted a downward performance with its $31.7 million revenue, translated as a 1.1 percent decreased from April 2010 statistics.

Looking at the collective income of the casinos from January to April 2011, however, the circumstances seem not so bleak. A total of $487.7 million were earned, out of which $39.5 million went to government. Comparatively, these numbers are way better than the ones reflected in April 2010. Apart from the current 10.9 percent imposed by the city, the casinos also pay 8.1 percent of revenue to the state. A tax increase will have a tremendous negative effect on casino income in the area, what with the operations of a new competitor in Ohio, coupled with Detroit’s high construction costs.