Pub barons clean up with pokie tax cuts VANDA CARSON AND SEAN...

Pub barons clean up with pokie tax cuts
VANDA CARSON AND SEAN NICHOLLS
June 10, 2010

HOTELS owned by some of Sydney's wealthiest pub barons will pay no tax or have their tax bill cut on poker machine profits following an overhaul of gambling taxes in the state budget, which the industry has celebrated as ''a result of historic proportions''.

The government is selling the changes as a rescue package for small country pubs, but the Herald can reveal that the upmarket Beresford Hotel in Surry Hills, bought by the multimillionaire Justin Hemmes just two months ago for $14.6 million, is among 485 pubs that will no longer pay tax on gambling profits.

Under the announcement, a tax-free threshhold of $200,000 will apply to poker machine profits for five years from July 1, coupled with a new tax scale. The changes mean 1100 NSW pubs - or 65 per cent - will either pay no tax or less tax.

As the Beresford's poker machine profits are only about $50,000, its annual gambling tax bill will be cut to zero.
A spokesman for the Hemmes family company, Merivale Group, said: ''Merivale controls or owns eight venues with poker machines, one of which is the Beresford Hotel. The Beresford is the only venue of the eight not required to pay tax, leaving seven of the eight paying tax. As a group, Merivale is paying more tax as a result of the changes.''
Calculations prepared for the Herald show that pubs with gambling profits of up to $700,000 will have annual savings of between $2473 and $27,543.

While the government says the budget measure is revenue neutral because pubs with larger profits will have higher tax bills, those with the largest profit margins of $5 million or more will pay just 2.5 per cent more tax, or an extra $46,500 a year.

Other hotels to pay less tax include the Glenmore Hotel in The Rocks, owned by the pub tycoon Fraser Short. The hotel's annual gambling profits are about $700,000, which translates to an annual saving of about $2400.
Mr Short told the Herald that the Glenmore does not rely on poker machines and that his company, Keystone Hospitality, was ''a food and beverage operation''. He supported the budget measure to help country pubs, which he agreed were struggling.

The Captain Cook Hotel on Flinders Street, owned by the developer Matthew Lepouris, has a poker machine profit of about $400,000. The hotel's tax bill will be cut by about $11,000.

The Royal Hotel at Paddington, owned by the Kelly family, and the Bristol Arms on Sussex Street, owned by NSW's largest hotel owner, National Leisure and Gaming, will pay less tax.

The NSW president of the Australian Hotels Association, Scott Leach, celebrated the move in an email to members yesterday.
''The AHA NSW has successfully lobbied the NSW government to guarantee future gaming tax rates and deliver an immediate tax cut to 65 per cent of NSW hotels,'' he wrote. ''This is a result of historic proportions for the industry following speculation last year the government was seriously considering increasing hotel tax rates.''

It is understood the deal was brokered by John Whelan, a former chief-of-staff to the former minister for gaming and racing, Grant McBride, who now works for the AHA.
Mr Whelan declined to discuss his role in securing the tax changes yesterday. The AHA did not return calls.