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Lawmakers say bingo tax unfair, repeal likely Thursday, Sep 25, 2008 By Rob Moritz Arkansas News Bureau LITTLE ROCK - Before bingo operators uttered an opposing word against it, members of a legislative committee concluded Wednesday that a state tax on charitable bingo games is unfair and should be repealed altogether. Doing so would cut funding for regulators and end state oversight of charitable bingo approved by popular vote two years ago, a move the state fiscal office warned could open the door to professional operators that might dwarf charitable organizations. Lawmakers were undaunted. "Does the chair deem it that the consensus is that we made a big boo-boo in putting this tax on (bingo) and all we need to do is correct that boo-boo, sew up and close the door?" asked Sen. Ruth Whitaker, R-Cedarville. "I would certainly agree with that assessment," replied Rep. David Evans, D-Searcy, who was chairing the meeting of the Joint Performance Review Committee. The panel met Wednesday discuss three proposed interim studies regarding elimination of the 1-cent tax on bingo game cards and to hear comments from a variety of bingo operators from across the state. The tax generated about $1.1 million last fiscal year, of which about $600,000 funded a new five-member division within the state Department of Finance and Administration formed to monitor bingo operations across the state. The rest of the money went into the state's general fund. "In my opinion, I believe that $1.1 million really needs to go back to our communities across the great state of Arkansas to go to the charities and other contributions that all of these organizations make to their local people," said Rep. Tracy Pennartz, D-Fort Smith. Pennartz, holding up a box containing 9,000 bingo game cards, said each box costs $27 and a $90 tax - 1 cent per game card - is added to that. Lawmakers were later told that that the cost of playing bingo varies depending on the organization, with some paying $25 for a packet of 66 cards. More than 500 people, mostly members of VFW posts around the state, crowded into the back of the large legislative meeting room during the three-hour hearing and on occasion cheered when a lawmaker spoke against the tax. Bingo operators eventually got their say, complaining that the tax had caused nonprofit organizations to cut back or eliminate programs such as funding scholarships and helping send high school students to Boys State and Girls State. Bill Vines, commander of an American Legion Post 31 in Fort Smith, said his post had to forego assisting college students this year and that the organization is trying to sell its building to help make ends meet. James Dahlem of VFW Post 8532 in Clarksville, said organizations in his area also are discontinuing all charitable giving because they don't have any money. "The once proud American fighting men from America's finest generation, who were not defeated at Guadalcanal, Iwo Jima or Normandy, in the twilight of their lives ... stand defeated by legislation," lamented Gene McVay of Fort Smith, a former Republican gubernatorial candidate who is legislative chairman for the American Legion of Arkansas. "This is a sad legacy for a great cause." Dahlem the state VFW is recommending its members oppose any candidate running for the Legislature who supports the tax. John Theis, the assistant state revenue commissioner, cautioned lawmakers and operators about potential problems with eliminating state oversight of the games. "Without regulation there is some concern that these large bingo organizations will come in and compete with these men and women back here trying to raise money for charity," Theis said. And despite getting letters from local law enforcement supporting repeal of the tax, Theis said DF&A "is concerned about the limited resources that law enforcement has and whether it will result in unequal enforcement as those with more limited resources deal with violent crimes and things of that nature." Bingo and raffles were viewed as constitutionally banned lotteries - some church and other groups still ran the games - until voters in 2006 approved a constitutional amendment authorizing recognized nonprofit organizations to conduct the games for charitable purposes. Theis presented a report showing bingo revenue totaled about $3 million for 99 nonprofit operators during the first nine months of last fiscal year, and about $623,000 in taxes paid, indicating bingo operators were paying about a 20 percent tax. "I wonder how the Red Cross would react if we charged them 20 percent to do business with the state," Sen. Dave Bisbee, R-Rogers, asked. "Do we really want to tax charities?" Rep. Betty Pickett, D-Conway, questioned why lawmakers were discussing the tax when, according to the DF&A report, nearly 70 percent of all money the nonprofits make on bingo goes to the prizes, while 6 percent ends up in the hands of charities. Several people watching the meeting from the back of the room yelled that no one would play the games if there were no prizes. |
