THOUSANDS of jobs would be lost and a third of betting shops would close if a proposed 2% tax on winning bets is introduced in December’s budget, bookmakers have warned.
Industry and political sources believe that Finance Minister Brian Lenihan is likely to favour the introduction of such a controversial measure given the Government must seek at least €3 billion in cuts to its 2011 budget. It is estimated that such a tax could raise around €60 million a year.
While punters would face a 2% tax on all winning bets, it is anticipated that many betting shop owners would absorb the charge on payouts in order to prevent gamblers switching to online and telephone betting operators based outside Ireland who are not taxed. Irish bookmakers currently pay a 1% duty on turnover.
The Irish Bookmakers’ Association last night expressed concern that a further tax on the betting industry would drive punters to overseas betting services and result in the closure of one-third of existing betting shops in the Republic.
“We believe that 400 of the 1,200 would shut up overnight. It would kill jobs in the industry,” said IBA chairwoman Sharon Byrne. The sector employs 6,500 people.
Ms Byrne claimed such a tax would place Irish betting shops at a further competitive disadvantage to foreign-based online and telephone betting operators.
“Paradoxically, therefore, rather than strengthening the contribution of the betting sector to the Irish Exchequer this new taxation would have the opposite effect,” said Ms Byrne.
A spokesperson for Paddy Power bookmakers described the proposed tax as “insane”.
The IBA pointed out that turnover at most betting shops had fallen by up to 40% over the past two years due to competition from offshore operators as well as the general downturn in the economy.
The organisation has also proposed an alternative means of raising revenue through a new licensing tax to cover betting shop, online and telephone exchange operators which the IBA claims would create an additional 3,000 jobs.
Taoiseach Brian Cowen indicated earlier this year that such a tax was also under consideration by the Government.
A number of sources have revealed that the 2% tax was proposed by Horse Racing Ireland, the administrative body of the horse racing industry, which is concerned about a €30m shortfall between revenue from betting tax and Government funding for horse and dog racing.
However, any money collected from a new betting tax is unlikely to be “ring-fenced” for the horse racing industry because of the wider budgetary concerns of the Government.
HRI chief executive Brian Kavanagh denied that it had made any submission for a 2% tax on winning bets to the Department of Finance, although he acknowledged that ongoing discussions about the funding of the industry are being held with a number of Government departments.
The HRI has highlighted how Ireland has the lowest betting tax in the EU with annual revenue from gambling currently at €31m compared to €67m in 2001 despite a fourfold increase in betting turnover over that period.
A spokesperson for the Department of Finance refused to comment on the issue, claiming all taxation matters would be dealt with in the forthcoming budget.
It is understood that the Government is also considering wider reform of taxation on the gambling industry by extending the existing 1% tax rate on turnover to internet operators.
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