Macau moves to boost GDP as gaming revenues decline

By James Pomfret  |   2008-11-12  |     NEWSPAPER EDITION

MACAU yesterday announced measures to ease the public tax burden and boost fiscal spending to kick-start the city's growth, as the financial crisis cool the gaming haven's three-year boom.

Speaking during his annual policy address yesterday, Macau's Chief Executive Edmund Ho said he would continue to cut taxes on salaries by 25 percent and raise the tax exemption limit by 26 percent from 95,000 patacas (US$11,900) to 120,000 patacas, given the bleak economic outlook.

This and other tax reduction measures would mean reduced taxation revenue of 1.1 billion patacas, he said.

Ho said the city government would spend 10.2 billion patacas on public investment in the coming year, while offering more financial assistance to small and medium-sized enterprises, electricity and rental subsidies, and soon propose lowering of stamp duties for property purchases from 3 percent to 1 percent.

"(Macau will) actively develop the economy and protect people's livelihood, to collectively tide over the relative difficulties together," Ho told Macau legislators.

In the first six months, Macau's real gross domestic product growth galloped at 26 percent, but analysts expect this to fall in the second half.

Ho resisted pressure, however, to grant tax cuts to the city's casino operators, including Las Vegas giants Wynn Resorts Ltd, MGM Mirage and the Las Vegas Sands Corp - which piled into Macau when the former Portuguese enclave liberalized its gaming sector in 2002.

Analysts have warned the financial crisis and credit crunch could hurt the slew of new gaming, retail and tourism projects in Macau's pipeline, with its gaming revenues having fallen by a 10th in the third quarter to US$3.2 billion as slowing economies began to bite.

This week, the Las Vegas Sands Corp, which warned it was in danger of violating loan pacts, said it would suspend construction in Macau along the Cotai Strip as it reels from a lack of financing options.