ELORA – Those who stand to lose revenue are calling a change in accounting procedures at the Ontario Lottery and Gaming Corporation (OLG) another tax grab by the Liberal government under Dalton McGuinty – and they plan to fight back.
Centre Wellington Mayor Joanne Ross-Zuj told council in committee of the whole on Aug. 8 that she sent a letter to Ontario Minister of Finance Dwight Duncan asking that the province force the OLG to honour its signed agreement on slots revenue with Centre Wellington.
The township is opposing a proposed claw back fee set up by the OLG that would send a portion of the township’s share of slots revenue directly to the provincial government, ignoring the agreement signed with municipal casino and slots hosts.
The loss to all of the host municipalities would be $10- to $11-million. Centre Wellington would lose about $69,000 a year in new fees to the province. It is not a direct tax, but a change in accounting procedures by the OLG.
Ross-Zuj said in a letter to Duncan on June 1, “I am writing with respect to OLG’s decision to replace the ‘Net win’ as clearly defined in the Racetrack Municipality Contribution Agreement with its interpretation of ‘gross revenue’ under the International Financial Reporting Standards (IFRS).”
Basically, the OLG is changing the way it does its accounting, but municipal slots and casino hosts are going to have to pay for it through a claw back fee.
Ross-Zuj said in her letter the OLG has acknowledged in conference calls with host municipalities that:
– implementation of the new accounting procedures has no impact at all on the OLG’s bottom line, because a reduction in its revenues is offset by a corresponding reduction in reported expenses; and
– the financial impact of OLG’s decision is to shift revenue from the host municipalities and the horse racing industry to the province.
The horse racing industry, as a partner in the slots facilities, also receives a share of slots betting. The slots were brought to race tracks in the first place in order to aid the horse racing industry.
Ross-Zuj said in the letter to Duncan the international accounting standards were developed by an independent, not for profit organization, and its goal is to provide an international framework for how various entities prepare and disclose information in their financial statements.
She has a problem with that, because the IFRS does not demand the extra fee. It is OLG and the province doing that.
She said in the letter “The goal of IFRS is to provide a global framework for how various entities prepare and disclose information in their financial statements. IFRS provides general guidance for the preparation of financial statements, rather than setting rules for industry specific reporting.
“Further IFRS does not require changes to existing contracts or agreements, unless the contract or agreement refers to calculations that are to be in accordance with a particular set of accounting standards (for example, generally accepted accounting principles). The Racetrack Municipal Contribution Agreement makes no such reference.”
Ross-Zuj concluded, “We understand the need for the OLG to implement the new accounting standards, however it not compulsory, under IFRS, for the OLG to replace the ‘Net Win,’ as clearly defined in the Racetrack Municipality Contribution Agreement.
“We respectfully request that the OLG honour its agreement with the township,” she said.
The mayor told council of OLG’s proposal that the municipalities are in agreement. “We felt it was an injustice.”
The AMO conference runs in London this year from Aug. 21 to 24, and Ross-Zuj said the leaders of the municipalities hosting slots have sought a meeting with Duncan to discuss the issue.
She told council, “Those accounting procedures should not be a cost to the municipalities.”
On Monday night, council agreed and passed a resolution against having to pay the fees.
But Ross-Zuj also noted that Duncan has not replied to the request for a meeting. She did said that Rod Phillips, the head of OLG, has agreed to a meeting with politicians from the affected communities.
At Monday’s meeting, councillor Fred Morris asked that Wellington County also be asked to get involved since it, too, is affected.
Ross-Zuj said she would relay the request to county officials.
