Despite an explosion in gambling over the past couple of decades, the state is taking in less money now from betting taxes than it was in 1990, The Sunday Business Post reports, in an extensive article on the heated battle between the bookies and the racing industry, which claims the bookies should be putting more back into horse racing.
The government took in the equivalent of €37m in taxes from gambling in 1990 – that figure was just €30m last year as a result of the reduction in betting tax from 10% to 1% currently. Deputy Editor Richard Curran poses the question: “At a time of severe austerity measures in the public finances, why is betting only taxed at 1%? And also, why is it so hard to get that rate up to even 2%?”
The reason is that it would now need a ministerial order (and a considerable amount of political willpower) to do so because in his last Finance Act Brian Lenihan decided to keep the rate at 1% on all bets generated in Ireland, including online and telephone betting.
Curran points out that if a punter were to go into a coffee shop and spend a tenner, the exchequer would get €1.30. If he went next door into the bookies and put the same tenner on a horse, the government take would be just 10c as gambling is Vat exempt.
Bookmakers argue the current rate is valid because for every €100 bet, they return €88 to the customer in winnings, leaving just €12 to cover all their overheads.
But Curran argues a doubling of tax to 2% should not make or break an industry, which is likely to consolidate further in the near future now the heady days of Celtic Tiger high disposable income are no more. He also rejects the industry argument that because online betting operations are mostly based outside the state, they would be more likely to actually pay 1%, whereas 2% would encourage them to pay nothing altogether.
“After all, we have cut the blind pension,” Curran says. “It’s hardly a credible basis on which to build a sustainable future business that, if a betting tax which used to be 10%, goes from 1% to 2%, it could be the difference between paying it and not.”