Sinn Féin hike in betting levy 'would wipe out 5,000 jobs'
A Sinn Féin proposal to hike betting tax would destroy 5,000 jobs and make the bookmaking industry here unviable, Goodbody Stockbrokers has warned in a report.
Small and independent betting shops would be worst affected if the plan outlined in Sinn Féin's alternative Budget proposal came into force, according to the report by analyst Gavin Kelleher.
"Very few betting shops would be viable under this proposal, significant closures are likely and 5,000 industry jobs would be put at risk," Mr Kelleher said in research circulated to investors.
A Fianna Fáil plan to raise the levy on betting by 50pc could wipe out 3,500 jobs, the same report said.
With an election on the horizon, proposals from the two main opposition parties Sinn Féin and Fianna Fáil "cannot be ignored" and would have "significant ramifications", the Goodbody report stated.
But Sinn Féin finance spokesman Pearse Doherty defended his party's plans.
"An increase in betting tax would allow for the State to appropriately fund the horse and greyhound industry and would, according to Horse Racing Ireland, create 4,000 jobs in rural Ireland," he said.
He said the Goodbody's report "totally misrepresented Sinn Féin's proposal", which would replace a 1pc tax on betting with a 3pc levy on winnings and would not put Irish operators at a disadvantage.
However, Sinn Féin's plan to levy its proposed charge on customers' winnings was unrealistic, Mr Kelleher said.
"Passing the cost on to customers is not an option given the existence of highly competitive offshore alternatives," he said.
Implementing the Sinn Féin proposal would mean a €32.2m financial hit for gambling giant Paddy Power and make its Irish operations unprofitable; smaller companies would fare even worse, according to Mr Kelleher.
Less drastic Fianna Fáil proposals to hike the tax to 1.5pc would still have major consequences, Mr Kelleher said.
"While it is hard to predict the exact number of shop closures, Paddy Power and Boylesport are likely to remain the only two operators left, which would imply 500-700 shop closures and the loss of 2,500-3,500 jobs," the Goodbody report said.
Fianna Fáil's Michael McGrath said bookmakers had saved €50m since 2011 because of the Government's failure to extend a 1pc betting levy to online gambling, but said he would consider the job implications of any tax changes.
"We are very conscious of the importance of employment in licensed betting shops. We are in the process of preparing the taxation element of our election manifesto. This will take into account all relevant issues including employment in the sector and the improving state of the public finances and tax revenue," he said.
A spokesman for Boylesports said any increase in the betting tax would have a "very significant" effect on retail bookmakers and would "devastate" smaller independent bookmakers. He called on opposition parties to engage directly with the betting industry.
A spokeswoman for Paddy Power declined to comment, but sources close to the company said the Goodbody findings were in line with its view of the market.
The Government is in the process of extending the existing 1pc betting tax levied on turnover in betting shops so that it also applies to telephone and online betting.