Donohoe under pressure to hike ‘lowest betting tax in the world’

FINANCE Minister Paschal Donohoe has been urged to more than double the 1pc betting tax, which is among the lowest in the world.

As he prepares his Budget, due for publication on October 10, Mr Donohoe (inset) is under pressure to increase the minimal €300m of spare cash available to him to fund tax changes and service improvements.

The minister has already said he was looking for savings across all departments, which will have a total spend of €60bn in 2018, and he is also looking at tax-raising options.

The lobby group representing 10,000 people who make their living from the €1.3bn thoroughbred horse sector argues that an increase in betting tax to 2.5pc would meet both of the Finance Minister’s objectives.

The Alliance for Racing and Breeding includes jockeys, trainers, stable staff, breeders and owners. It argues that increasing betting tax could fully cover existing horse and greyhound industry subsidies, and also leave extra cash for the national coffers.

The group says that, last year, the Horse and Greyhound Fund was allocated €74m. Some €51m came from the betting tax and an exchequer top-up of a further €23m.

The alliance said doubling the tax to 2pc would raise €100m, ending the need for an exchequer top-up, and leaving another €25m for other items. A 3pc betting tax could yield €147m, which would give Mr Donohoe an extra €73m per year to spend on other things.

The group has made its submission to the Tax Strategy Group, which brings together senior officials from all the big tax and spend departments, and advises the Finance Minister on the Budget. The submission was prepared by wellknown economist Colm McCarthy.

While Mr McCarthy’s study looked at a 2pc betting tax, the alliance said it was urging a 2.5pc rate.

The group also pointed to dwindling tax revenue from betting. Back in 2001, punters wagered about €1.3bn, on which the State collected taxes of 5pc, totalling €68m.

In 2016, punters bet more than €5bn but the 1pc betting tax collected was under €51m. That was even after efforts to bring online betting into the tax net.

It does, however, concede a downside is for the smaller, independent bookies who continue to struggle to compete with the major operators. Their turnover is smaller and their margins ever tighter and a tax could hit them hard.

An option here might be to go back to the old system and make the punter pay tax as and when they bet. Another option might be to spread the tax between the bookie and the backer.

The group also argues that bookmaking giants Paddy Power and others pay far higher taxes in other jurisdictions and still do well enough to want to expand operations in these higher-tax locations.

In New South Wales, where Paddy Power has a growing business, it pays 10pc VAT equivalent and 11pc betting duty, and other taxes. But the organisation is keen to expand there.

Betting, unlike most of life’s necessities, is also VAT-free, cutting both costs and administrative burdens for bookmakers. Government sources said it was too early to signal a response.