Business Irish

Monday 16 September 2019

Doubling tax on bookies could cost Exchequer €35m, academic warns


Sharon Byrne of the Irish Bookmakers Association
Sharon Byrne of the Irish Bookmakers Association

Fearghal O'Connor

The Exchequer could lose up to €35m because of the hike in betting tax that could cause "severe job losses" by putting as many as 400 bookmaker shops out of business, a new report has found.

The report author, Anthony Foley, emeritus associate professor of economics at DCU, concluded that the increase in betting tax from 1pc to 2pc, will have a significant impact on commercial viability and hit smaller shops in small towns and villages.

The report said the new measure "does not appear to have involved consideration of the possible negative effects on the existing tax take from the sector in such as income tax, USC and PRSI and increased expenditure from unemployment due to job losses." Foley said the hike happened "apparently without a detailed analysis of the possible negative economic effects on the commercial viability and sustainability of bookmakers, unlike the Department of Finance's analysis of the hospitality VAT increase".

"Arising from Exchequer revenue reduction, due to loss of other taxes, job losses and possible closures, the Exchequer losses could be in excess of the gain from the 100pc increase in betting tax for the retail sector, if shop closure rates are at the rate predicted by the industry," he wrote.

It was "very unlikely given the state of the sector that many enterprises could absorb the increase through lower margins and retain viability."

The traditional bookmaker sector has suffered over 515 closures since 2008, he said.

Sharon Byrne, chairwoman of the Irish Bookmakers Association, which commissioned the report, said her organisation hoped the report would "highlight the fact that no costing was done in the Department of Finance for this measure."

"We are hoping that Minister Donohoe will see that the tax is flawed and might consider an amendment to bring in a more appropriate tax that can still bring in a lot more revenue for the Exchequer but in a fairer way that can keep the little guys open," she said.

But in its own report, British betting sector consultancy Regulus Partners said that Irish betting tax was already one of the lowest in the world and had created a "time bomb" in the industry. The report raised concerns for Irish horseracing that bookies would attempt "to reduce the effective tax rate by pushing much higher margin non-racing products (eg, football multiples), while also seeking to reduce horseracing content costs."

The impact could be mitigated by "producing high-quality, competitive horseracing from a well-funded base that Irish punters still love".

"The best mitigation all round, therefore, is for Irish bookmakers to work with Irish horseracing to ensure that the sector is producing high-quality betting product."

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