The Macau government fiscal surplus is down by 32.1 percent year-on-year in the first half of 2016 to MOP17.26 billion (US$2.16 billion) as public revenue – which mainly relies on direct tax from gaming – keeps falling.
Much of the city’s public revenue comes from taxes on gambling, levied at an effective rate of 39 percent of the gross. The government’s total revenue stood at MOP47.85 billion at the end of June, 13.5 percent lower than in the prior-year period, according to data disclosed by the city’s Financial Services Bureau.
Direct taxes from gaming brought in 82.8 percent of the Macau government’s total revenue in the six months to June 30. The government collected a total of MOP39.61 billion in direct taxes from gaming in the first half of 2016, down by 13.4 percent year-on-year.
Accumulated direct tax from gaming has been declining as casino gross gaming revenue (GGR) in Macau continues to fall. Aggregate GGR for the first six months of 2016 stands 11.4 percent lower than in the same period in 2015, at about MOP107.79 billion.
In June, GGR stood at approximately MOP15.88 billion, the lowest monthly tally for Macau casino GGR since September 2010, according to official data.
While government revenue is declining, expenditure has actually been increasing, although at a slower pace than in previous years. Public spending in the first six months of 2016 reached MOP30.59 billion, up by 2.3 percent year-on-year, the official data show.
Although the government’s surplus is down more than 30 percent year-on-year, it is nearly five times above the MOP3.47-billion forecast for the full year. The execution rate on budgeted spending stood at 497.5 percent in the first half according to finance bureau data.
Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac, said earlier this month that the government expects overall casino GGR in the city to continue declining – in year-on-year terms – in the second half of 2016. However, the rate of decline is likely to slow, Mr Leong said.
The government maintains its forecast for the city’s GGR at MOP200 billion for 2016. That would represent a decline of 13.4 percent compared to the MOP230.84 billion in casino GGR recorded for the whole of 2015.
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Vitaly Umansky, Kelsey Zhu and Tianjiao Yu
Analysts at brokerage Sanford C. Bernstein