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The Institute for Public Policy Research (IPPR) has proposed a significant increase in gambling taxes in the UK, aiming to raise around £3 billion to alleviate child poverty. The proposed changes include raising Remote Gaming Duty (online casinos) from 21% to 50%, Machine Games Duty (slots and gaming machines) from 20% to 50%, and General Betting Duty on non-racing bets (mainly sports) from 15% to 25%.
This move comes as discussions about harmonizing tax policy re-emerge, causing concern among gambling firms about potential reforms. However, it remains uncertain at this stage whether the industry will be hit with these changes, and if so, it may take some time before they can be enacted.
The betting and gaming industry has responded cautiously and critically to the proposal. Companies argue that the tax increases would mainly be passed to gamblers, potentially reducing profits and competitiveness. There is concern that very high tax rates may push betting activity offshore or reduce participation, harming industry revenues and possibly resulting in lower-than-expected government tax income.
Companies like Flutter Entertainment have highlighted the risk of losing business since betting is an international market, and UK taxes can be avoided by shifting customers to less-taxed jurisdictions. The Betting and Gaming Council has rejected the IPPR's proposals as "reckless" and "misleading".
Despite industry resistance, the proposal has support from figures such as former Prime Minister Gordon Brown and billionaire investor Michael Caudwell, who argue that the tax increases are necessary to address social inequality and child poverty. Gordon Brown, in his role as Chancellor, oversaw the liberalization of the UK gambling market in 2005.
The IPPR acknowledges a potential risk to black markets but considers it not a "major threat". They distinguish between stricter regulation and higher rates of taxation in relation to unregulated gambling.
The proposed increase in general betting duty is to 25%, while the increase in remote-gaming and machine-gaming duties is to 50% each. These rates are higher than those in some other jurisdictions, such as the Netherlands (35% for remote-gaming duty), Austria (40%), and Pennsylvania (50%). However, they are lower than the tax levied on cigarettes (80%) and whisky (70%) in the UK.
A poll by the Social Market Foundation in October 2024 showed that 52% of the public support doubling taxes on gambling companies. Ignoring the IPPR's call to alleviate poverty through a tax increase on gambling operators could be difficult for Chancellor Rachel Reeves, particularly given the public's support for such a measure.
In summary, the IPPR’s tax hike plan is ambitious and socially motivated but faces resistance from the gambling industry due to potential economic impacts and doubts about achievable revenues. The outcome of this debate will have significant implications for the UK's gambling industry, public finances, and efforts to combat child poverty.
| Proposal Element | Current Rate | Proposed Rate | Purpose | |-------------------------------------|--------------|---------------|-----------------------------------| | Remote Gaming Duty (online casinos) | 21% | 50% | Raise revenue for child poverty | | Machine Games Duty (slots) | 20% | 50% | | | General Betting Duty (non-racing) | 15% | 25% | Align with horse racing rate |
| Industry Reaction | Notes | |----------------------|--------------------------------------------------| | Concerned about tax pass-through | Gamblers likely to pay, risking player losses | | Concern over competitiveness | Higher taxes may drive bettors offshore | | Skepticism on revenue estimates | Static tax model may overstate government take |
- The social-media buzz surrounding the IPPR's tax hike proposal on gambling operations is intense, with many voicing their opinions about the potential impact on industry competitiveness and child poverty alleviation.
- The entertainment industry, while not directly involved in the gambling debate, is keeping a close eye on the developments in politics and general-news related to the proposed tax increases, as they could indirectly affect consumer spending patterns and revenue streams.
