Higher betting tax was shelved amid warnings on job losses

The Minister for Finance Paschal Donohoe kicked to touch on doubling tax on betting in Budget 2018 amid warnings of job losses from the Irish bookmaking industry.

The Department of Finance had presented three options that could have raised up to €50 million extra from bookies or punters as part of a review of betting tax.

However, Mr Donohoe decided he would leave the 1 per cent rate in place 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”.

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They said it could lead to the closure of businesses and job losses, with a “particularly stark” risk for individual or smaller operators.

A note presented to Mr 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.”

The department’s note explained that there was “ongoing pressure” to increase the tax on betting, which is among the lowest in the world.

Three options

Mr Donohoe was told there were three options. Firstly, to double the rate to 2 per cent, which would have raised an additional €50 million but was being resisted by the bookmaking industry.

“The second was to tax the punter, which the department said would come 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 note explained.

It would also be complicated by having to tax betting exchanges, such as Betfair, where tax is currently based on the commission charged.

In addition, the Minister was told that other countries had suffered a “negative experience” when they tried to tax the punter.

The third option suggested a special tax on the gross profits of bookmaking firms.

“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,” the note to the Minister said. “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.”

Next year

However, Mr 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 even if extra revenue was earned from betting taxes, there was an expectation by some that it would go directly to the horse racing and greyhound industry.

In response to the document, Mr Donohoe said he had “decided not to change this rate in Budget ’18” and he would consider it next year.

A statement from his department said: “The minister received a number of submissions for possible inclusion in Budget 2018. He took the decision that any potential actions on foot of the Betting Tax Review should be considered as part of Budget 2019.”