Bar Owners Protest Taxes On ‘Money That Doesn’t Exist’

Spokane County’s tax on pull-tab games goes after “phantom money” and should be changed, a tavern owner told county commissioners on Thursday.

The county levies a 5 percent tax on the amount wagered on pull-tabs, hand-held paper gambling games based on slot machine symbols. Under certain circumstances, the tavern owner ends up paying taxes on money that doesn’t exist, said Bob Materne, owner of The Swinging Doors, a bar and restaurant on West Francis Avenue.

Materne offered an example similar to this: A patron wagers $5 on pull-tabs and wins $135. The patron takes his $135 in winnings and bets it all. The patron loses.

Though the bar has only put $5 into its till, it will pay a 5 percent tax on $140.

“We’ve been paying a phantom tax for 24 years and it is killing us,” Materne said.

He and Vito Chiechi, director of the Washington State License Beverage Association, asked commissioners to change the county’s taxing formula.

Instead of taxing the amount wagered, tax the amount a bar actually puts in the till after paying winning gamblers, Materne asked.

Because of a state law that took effect July 27, that’s how nonprofit gambling houses are to be taxed, although the county has yet to implement the change. The law also allows the tax to be as high as 10 percent.

“We are asking for parity with charitable casinos,” Chiechi said.

Such a change would amount to a tax cut for operations like The Swinging Doors and less revenue for the county.

If the county shifted from its current 5 percent tax on wagers, to a 5 percent tax on how much a commercial gambling house puts in the till, it would mean $306,000 less a year in tax collections, said Bob Wrigley, finance manager in the county treasurer’s office.

A similar tax change for nonprofit casinos would only result in $38,000 in lost tax revenue, Wrigley said.

Commissioners didn’t make any promises to Chiechi or Materne. Kate McCaslin was the most sympathetic, noting that businesses like The Swinging Doors faced stiff competition from tribal gambling operations, “from which the county derives very little revenue.”

However, county finances are tight and any change in tax structure must be considered in the context of the budget, McCaslin said.

The commission will look at the tax formula during the budgeting process, which beings in September, McCaslin said.

, DataTimes