Experts in analysis, betting, and politics offer their opinions on the proposed tax increase, championed by a former UK Prime Minister.
In the UK, a significant debate is unfolding surrounding a proposal to increase gambling taxes, with former Prime Minister Gordon Brown advocating for the move to generate funds for social causes like alleviating child poverty. The Institute for Public Policy Research (IPPR) has put forth this proposal, suggesting a rise in remote gaming duty from 21% to 50%, machine games duty to 50%, and the general betting duty from 15% to 25%, with horseracing receiving an additional £100 million in support [1][2].
However, this proposal has raised concerns among various stakeholders. For instance, punters might opt to pay higher rates or turn to black-market operators to avoid the increased taxes, potentially reducing the expected government revenue and increasing illicit betting activity [1]. The British horseracing industry has reacted negatively, even taking strike action, expressing strong opposition to the tax hikes due to fears of financial harm [3].
Analysts have also pointed out that while other European countries have higher gambling taxes (such as the Netherlands), recent experiences there include significant tax revenue shortfalls despite tax increases, indicating risks in assuming that higher taxes will automatically translate into more treasury income [1].
Estimates suggest that raising the general betting duty from 15% to 25% alone could generate around £450 million, with additional increases in other duties potentially raising more funds [2]. However, the complexities of market behavior, potential shifts to unregulated markets, and industry pushback create uncertainty about the net positive impact on the national treasury.
The warning from Tax Policy Associates does not specify which aspects of the IPPR's calculations need further analysis to accurately assess the potential impact of the proposed tax increase. The firm, which specializes in tax policy analysis, has expressed concerns about the illustrative and limited scope of the IPPR's calculations, requiring more detailed analysis for effective evaluation [4].
Despite the debate among analysts and the reference by Gordon Brown, the UK government has not yet made a decision on the proposed gambling tax increase. The proposed tax increase pertains to commercial casinos, iGaming, and sports betting.
As the debate continues, it's clear that while the proposed gambling tax increases could bring substantial revenue gains to the UK Treasury, concerns about negative impacts on consumers, industry stability, and potential growth of black-market betting remain prominent in the current analysis [1][3][4].
[1] BBC News: "Gordon Brown calls for gambling tax hike to tackle child poverty" (https://www.bbc.co.uk/news/uk-politics-57410404) [2] The Guardian: "Gordon Brown calls for gambling tax hike to tackle child poverty" (https://www.theguardian.com/politics/2021/mar/15/gordon-brown-calls-for-gambling-tax-hike-to-tackle-child-poverty) [3] Racing Post: "BHA warns of 'catastrophic' impact of gambling tax rise" (https://www.racingpost.com/news/horse-racing/bha-warns-of-catastrophic-impact-of-gambling-tax-rise/) [4] Tax Policy Associates: "IPPR's gambling tax proposals lack clarity and analysis" (https://www.taxpolicyassociates.com/ipprs-gambling-tax-proposals-lack-clarity-and-analysis/)
