Second Reading Speech by Mr Raymond Lim, Second Minister for Finance and Foreign Affairs on the Private Lotteries (Amendment) Bill 2006, at The Parliament, 3 April 200603 Apr 2006
Mr Speaker, Sir, I beg to move, "That the Bill be now read a second time."
Overview of the Bill
2. The Bill seeks to achieve three key objectives. First, to change the tax regime for fruit machines in private clubs, as announced by the Prime Minister in his recent Budget Statement. The basis of taxation will be changed from deemed turnover computed by formula from the amount of coins remaining in the cash box of the fruit machine, to actual turnover. The current tax regime was introduced in the 1950s when meters in fruit machines could not accurately capture the turnover of the machines. Fruit machine technology has moved on since then, and so should the tax regime. The rate of taxation will be set initially at 12% of actual turnover, which is the revenue-neutral rate based on survey data. MOF will monitor the actual revenue impact of the new tax regime and is prepared to consider adjusting the rate of taxation accordingly, as the basic purpose of the change in the tax regime is to update the basis of taxation rather than to gain extra revenue. The new tax regime will take effect in a few months, after the clubs have made the necessary adjustments to their systems.
3. Second, the Bill formalises the transfer of the regulation of private lotteries, including fruit machines, from the Ministry of Finance (MOF) to the Ministry of Home Affairs (MHA). This transfer took place administratively in April 2004, to harmonise the regulation of all gambling activities under the Ministry of Home Affairs.
4. Third, the Bill enhances the powers of the Inland Revenue Authority of Singapore (IRAS) and MHA, to better facilitate the collection of private lottery duties and the regulation of private lotteries.
5. Sir, I will now go through the key provisions of the Bill.
6. Clauses 3 to 6 formalise the transfer of regulatory functions from MOF to MHA. In particular, clause 3 inserts a new section 2A to allow the Minister for Home Affairs to appoint a Permit Officer to regulate private lotteries, including issuing a permit to operate private lotteries, in place of the Commissioner of Estate Duties. Clause 5 also amends section 4 to allow the Permit Officer the discretion to suspend a permit, in addition to revoking a permit.
7. Sir, I now move to the tax regime for fruit machines. Clause 8 amends section 7 to change the tax from 30% of deemed turnover to 12% of actual turnover. Clause 3 inserts a new section 2B to allow the Minister for Finance to appoint a Commissioner of Betting Duties to collect private lottery duties, instead of the Commissioner of Estate Duties.
8. Sir, the next few clauses facilitate the collection of slot machine taxes and the regulation of private lotteries through a penalty system. Clause 9 introduces penalties for failure to keep and submit proper accounts to the Commissioner of Betting Duties. Clause 10 increases the penalty for conducting a private lottery without a valid permit, to be on par with penalties for similar offences under the Common Gaming Houses Act. To specifically address the illegal operation of fruit machines at "bogus" clubs, the penalty will increase with the number of fruit machines found. Clause 10 also creates a presumption that any person found in possession of fruit machines without a valid permit will be presumed to be conducting a private lottery and thus be guilty of an offence.
9. Clause 11 repeals and re-enacts section 11 to empower the Permit Officer to authorise a police officer to enter premises and search, seize and retain machines and documents. Clause 12 repeals and re-enacts section 13 to extend the power of the court to order forfeiture of machines and documents and to allow interested persons to show cause to the court why forfeiture should not be ordered.
10. Clause 12 introduces a new section 13A to empower the Commissioner of Betting Duties and the Permit Officer to compound offences. This is in line with the Ministry of Law's decriminalisation drive.
11. Sir, the Bill also makes two related amendments to the Betting and Sweepstake Duties Act and the IRAS Act. Clause 15 amends the Betting and Sweepstake Duties Act to allow the Commissioner of Betting Duties to collect betting and sweepstake duties, instead of the Commissioner of Stamp Duties. Clause 16 amends the Fourth Schedule of the IRAS Act to provide for the appointment of the Commissioner of Inland Revenue as the Commissioner of Betting Duties to collect private lottery duties and other betting and sweepstake duties.
12. Mr Speaker, Sir, I beg to move.