Illegal gambling has cost the country around R110m in tax revenue, affecting service delivery, the Casino Association of South Africa (Casa) said on Friday.

“South Africa relies heavily on tax revenue with 34% derived from personal tax and 20% from corporate tax,” CEO Themba Ngobese said.

“Any erosion of the corporate tax base means more burden for individual taxpayers. There is already talk of moving the VAT rate from 14% to 15% to inject an additional R16bn into the economy.”

Adding VAT on zero-rated food options was also an option being considered.

Ngobese said the legal casino industry in South Africa contributed R4,5bn in tax revenue to the government last year, a significant amount for a single business sector.

“Any erosion of this amount is a real issue for the country,” he said.

He cited the “aggressive” online gambling industry as one of the reasons why casino revenues had dropped from 10% growth in the 2012/2013 financial year, to 0,6% in 2013/2014.

While some of the reduced growth was related to a slowdown in the South African economy in the past 18 months, Casa’s evidence suggested that illegal online gambling operators were targeting South Africans and taking revenue offshore.

Casa estimated that at least 5% of the revenue contraction in 2013/2014 was due to expenditure moving offshore to illegal gambling entities.

“That five percent loss of revenue equates to R110m less gaming tax revenue this year for the country,” Ngobese said.

Casa recently launched a campaign targeting online gamblers, operators, and service providers which was already beginning to produce results.

“We have already had some good reports to the provincial gambling boards about illegal operations which are currently being followed up by investigators in sting-operations,” said Ngobese. — Sapa