HORSE Racing Ireland will continue to lobby for an increase in betting tax in 2018, despite revelations this week that the Department of Finance’s Tax Strategy Group warned the Minister of the dangers of tampering with the current tax regime.

A review of betting tax was conducted earlier this year and this process involved consultation between the Department and industry stakeholders. A total of 13 submissions were received by the Department and they included the views of Horse Racing Ireland, the Alliance for Racing and Breeding, plus several betting companies.

A discussion document prepared for the Minister by his officials outlined three Budget options, though all three were presented as risky.

Raising betting tax from 1% to 2% was seen as “potentially damaging for the retail sector, leading to the closure of businesses and job losses. The case outlined was particularly stark in the context of the individual or smaller operator.”

HRI’s proposal to place some of the tax burden on the punter was only described in negative terms by the Finance officials. They warned the Minister that such a move has not worked well in other jurisdictions and it could lead punters to seek out unlicensed betting companies.

The third option, to switch from a turnover tax to a gross profits tax, was also presented as unwise as there would be less stability around the tax yield and this would place more of a risk burden on the Exchequer.

Replying to his officials, the Minister for Finance Paschal Donohoe said: “As you know I decided not to change this rate in Budget ’18. Will consider for next year.” This has been taken as a positive indicator by HRI chief executive Brian Kavanagh, who confirmed that the campaign for a betting tax increase will continue.

ROBUST DEBATE

“We look forward to a detailed and informed debate in 2018 on the matter of the system and rate of betting tax in Ireland and the funding of the racing industry,” he said. “The vast majority of betting operators in Ireland are paying significantly higher rates of tax in other jurisdictions such as the UK and Australia. HRI will continue to make this case and point out this anomaly.”

The Alliance for Racing and Breeding suggested raising betting tax from 1% to 2%, a move which would in theory raise an extra €50 million in revenue each year. HRI went further, asking for the tax to be raised to 2.5% but “with the 1.5% increase to be paid by the punter, not the bookmaker, as was the case up to 2006.”

Both the Irish Bookmakers Association and the Irish Independent Betting Offices Association implored the Minister to either maintain the current tax rate or lower it for smaller operators.

Paddy Power Betfair, now one of the world’s biggest betting companies, told the Minister that any increase above the current 1% rate would have a direct impact on the profitability of most of their 263 shops in Ireland which employ 1,300 staff. The group has a total of 2,800 staff in Ireland. The betting giant also said that the 15% gross profits tax currently levied on betting exchanges should also be maintained.