Betting tax increase could cost jobs, bookmakers warn

Finance Minister Paschal Donohoe kicked to touch a decision 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 1% rate 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.

The departmental submission explained that there was “ongoing pressure” to increase the tax on betting, which is among the lowest in the world.

Mr Donohoe was told there were three options open to him, the first simply to increase the rate from 1% to 2%. 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 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 submission explained.

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 (€102.5m) in the first quarter of 2017.

The submission explained: “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, Mr Donohoe was told that such a gross profits tax would require “significant additional work” before it could be introduced.

In his 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.