FINANCE Minister Paschal Donohoe kicked to touch on doubling 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 €50 million extra from bookies or punters as part of a review of betting tax.
However, Mr Donohoe decided he would leave the 1% rate of tax well 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, 8 were from the betting/gaming industry, 2 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 simply to increase the rate from 1% to 2%. It would have raised an additional €50 million 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 UKÂ£91 million 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 even if extra revenue was earned from betting taxes, there was an expectation by some that it would go directly to 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.
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.”