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Macau's unused billions: booming casino taxes sit in govt coffers

Macau's unused billions: booming casino taxes sit in govt coffers
From Reuters - September 11, 2017

MACAU (Reuters) - Over the past five years, Macau has raked in $70 billion in taxes from the casinos that have made the territory the largest gambling center in the world.

But it has invested less than 10 percent of that takeby far its largest source of incomein much needed infrastructure.

That shortfall was laid bare last month when Macau was struck by a typhoon that killed 10 people and wiped out power and water for over half the city.

Years of mismanagement, poor planning and corruption are key reasons why the money has not been better utilized, according to academics, legislators and residents.

They could spend much more, said Eric Sautede, a former professor at the University of Macau, and now a researcher specializing in the former Portuguese colony, referring to infrastructure investment.

He said the governments coffers were so large it could operate for the next several years without collecting taxes.

However, taxes from Macaus six casino operators - which account for more than 80 percent of government revenue annually - continue to pour in.

The southern Chinese territory has zero public debt and had fiscal reserves of $55 billion at the end of 2016, equal to 540 percent of public expenditure that year, according to statistics from Macaus financial bureau.

Macaus monetary authority said it invests the reserves in a globally diversified portfolio of assets, with a stringent control on the overall risk level of the portfolio.

The annual rate of return during 2012-2016 ranged from 0.7 percent to 3 percent, it said.

Macaus government typically distributes an annual cash handout of 9,000 patacas($1,117.73) for each of the more than 600,000 people living in the territory, as well as subsidies for things likeeducation and small businesses.

The governments execution rate for infrastructure projects like roads, bridges, ports, and schools has also been low in recent years, according to an analysis of government figures.

In 2013, as casino revenues hit a record $45 billion, the government had an execution rate of under 40 percent.

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