Gambling tax increases may be in the cards for Oak Harbor

Odds are that Oak Harbor will start taxing a wider variety of gambling activities and increase the tax rate on pull tabs.

Oak Harbor City Attorney Nicki Esparza presented proposed amendments to the city’s gambling tax code during a city council workshop Wednesday. The end result will likely be more tax revenue, earmarked for public safety.

The proposal offers some exemption for charitable gambling activities.

Esparza explained that the city currently only taxes bingo and pull tabs, but the proposal would add raffles, amusement games and “social card games” to the list.

The proposal increases the tax rate for pull tabs tenfold, from 1 percent to the state maximum of 10 percent of gross receipts minus the amount awarded as cash or prizes. Councilman Bill Larsen, however, objected to the “shocking” tax increase.

“It seems rather exorbitant, especially right off the bat,” he said.

Esparza explained that tax rates in the proposed amendments are all set at the state maximum amount and it’s up to council to decide whether they should be lower. Larsen said he would rather see a stepped increase over time; other council members seemed to agree.

Esparza asked Larsen to let her know after the meeting what he would like to see.

Councilman Joel Servatius said he is in favor of the gambling taxes, especially if they might lead to fewer gambling opportunities and more money for police.

“I worry that people least likely or able to part with discretionary income might be the people that engage in those activities,” he said.

He also noted that card games are “a serious cash business that probably should be taxed.”

Under the proposal, tax rates for the raffles are set at 5 percent, amusement games at 2 percent and social card games at 20 percent. Bingo would remain the same at 5 percent.

The proposed code change sets somewhat complicated exemptions for charitable organizations based on the type of gambling. It would exempt, for example, the first $5,000 in gross receipts for bingo, then impose a 5 percent tax minus the amount awarded for cash or merchandise.

Esparza said that seven local businesses currently report gambling taxes for bingo and pull tabs. The city collected $9,100 in gambling taxes last year, most of which was from pull tabs.

While the current tax haul isn’t very big, Esparza pointed out that a tenfold increase in pull tab tax could mean a much more significant amount of revenue.

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