Betting tax kept low after bookies’ complaints
FINANCE Minister Paschal Donohoe kicked to touch moves to double tax on betting amid warnings of jobs losses from the Irish bookmaking industry.
The Department of Finance had presented three options that could have raised up to €50m extra from bookies or punters as part of a review of betting tax.
However, Mr Donohoe decided he would leave the 1pc rate of tax alone and reconsider the increase in next year’s budget.
The Department had received multiple submissions from the betting industry who had warned an extension of the tax could be “potentially damaging”.
They said it could lead to closure of businesses and job losses, with a “particularly stark” risk for individual or smaller operators.
A submission for Minister Donohoe said: “A total of 13 submissions were received.
“Of these, eight were from the betting/gaming industry, two were from the horse racing industry, one from the addiction advocacy service and two from individuals. Follow-on meetings were held with six of these at their request.”
The Departmental submission explained that there was “ongoing pressure” to increase the tax on betting, which is among the lowest in the world. Minister Donohoe was told there were three options open to him, the first to increase the rate from 1pc to 2pc.
It would have raised an additional €50m but was being resisted by the bookmaking industry.
The second option was to tax the punter, which the Department said came with its own set of risks.
“[There is] the possibility of punters seeking out alternative untaxed forms of betting or a move towards unlicensed operators,” the submission said.
It would also be complicated by having to tax betting exchanges such as Betfair where tax is currently based on the commission charged.
The minister was also told that other countries had suffered a “negative experience” when they tried to tax the punter. The last option suggested a special tax on the gross profits of bookmaking firms.
Paddy Power Betfair for instance had operating profits of £91m (€102m) in the first quarter of 2017.
The submission explained: “There is no doubt that a move to gross profits would be of advantage to business as the level of tax payable will change in response to margins.
“From a revenue point of view there is less stability around the yield of the tax and it is more susceptible to changes in the trade environment.”
However, Minister Donohoe was told that such a gross profits tax would require “significant additional work” before it could be introduced.
The minister was also told that if extra revenue was raised from betting taxes, there was an expectation it would go to support the horse and greyhound industry.
“In the context of the historical link between betting revenues and the funding of the … industry, any increase in betting receipts will be seen by some in the industry as being earmarked for the Horse and Greyhound Fund,” the submission said.
In his response to the document, Minister Donohoe said he had “decided not to change this rate in Budget ‘18” and he would consider it next year.
Mr Donohoe will leave the 1pc rate of tax alone and reconsider the increase in next year’s budget