Aging as a welfare threat doesn’t add up in gambling town

Paulo Coutinho

Every now and then, the city’s political class reaches for a familiar line: Macau’s aging population is placing unbearable pressure on welfare and pensions. It’s a tidy narrative – demographic anxieties always sell – but in Macau it borders on the surreal.

Because let’s be honest: as if normal professional or commercial taxes could ever pay world-top-level public salaries for the highest officials, let alone carry the full weight of our bloated public administration. They can’t. They never have. And everyone who has ever looked at a Macau budget knows it.

Macau doesn’t run a welfare state powered by income tax and broad corporate taxation. It runs a treasury powered almost exclusively by casinos. The entire fiscal architecture is built around one big pipe: gross gaming revenue. Everything else is small change.

The numbers aren’t obscure. Under the current regime, the effective tax on gaming sits at roughly 40 percent of GGR – a mix of the 35 percent special gaming tax plus several layers of statutory contributions. In 2024, that translated into about MOP88 billion of pure gaming tax flowing into government coffers. Call it what you want – a golden goose, a structural addiction, a fiscal shortcut – but it is the single engine keeping the lights on.

Meanwhile, non-gaming taxes – salaries tax, complementary tax, SME levies – are background noise. Their total contribution is a single-digit percentage of government revenue. They are fiscally symbolic, not structurally significant.

This isn’t a controversial point. Decades ago, before the handover, economists were already saying that Macau could abolish work-related taxes altogether because gaming receipts were more than enough to fund social expenditure. That was the 1990s, with a fraction of today’s GGR. Fast-forward to the present, and the arithmetic is even more obvious.

So when senior officials frame aging as a looming budgetary disaster, the logic doesn’t hold. Macau is not Sweden or Japan. Our pensions don’t live or die based on the size of the workforce. They live or die based on casinos – visitation flows, mainland consumption cycles, regulatory winds, competition from Singapore and Manila. If there’s a genuine long-term risk to pension sustainability, it won’t come from a few extra gray heads in Areia Preta. It will come from an economic model that still leans almost entirely on one volatile sector.

Yes, the population is aging. Yes, healthcare and elderly services will cost more. But to suggest that the aging curve itself threatens the fiscal foundation is misleading. It shifts the debate away from the real vulnerabilities: lack of diversification, dependence on a single tax base, and the structural cost of an oversized administration and public-funded companies.

Macau has enough resources to fund dignified pensions and proper elder care for decades – provided the city maintains a healthy gaming ecosystem and finally builds complementary industries that aren’t just PowerPoint slides.

So, if we want a real conversation about long-term sustainability, let’s stop pretending aging residents are the problem. The real question is whether the economic engine feeding the welfare machine can stay fit as the world around it changes. And whether we’re willing, at long last, to build a second engine.