03/11/2012 : IRISH ONLINE BOOKIES FACE TAX INCREASE
Newspaper sources claim tax hike to same levels as land bookmakers is imminent
The Sunday Independent newspaper claimed over the weekend that impeccable sources have revealed that online bookmakers operating in Ireland will be liable for the same betting taxes as high-street shops, to allow the horse racing industry pay for itself.
The Itish taxpayer currently subsidises the horseracing industry to the tune of Euro 56 million a year, and government's objective is to do away with this state largesse.
"Agriculture Minister Simon Coveney is to bring forward legalization to subject all bookmakers taking bets from Irish punters to a one percent tax on all of their transactions, to reduce the burden on the taxpayer," the newspaper claims.
Minister Coveney has also apparently commissioned a major enquiry into the horse-racing industry by consultancy firm Indecon, which will focus on the trade association, Horse Racing Ireland, which is the subject of criticism by bookmaking companies.
To date, online betting operators have not been liable for taxation, whereas all bets made in high-street shops are subject to the one percent betting tax.
The new law will require all bookmakers to pay for a licence to operate in Ireland. This means offshore operations will be drawn into the Irish tax net for the first time, the Sunday Independent notes.
Major bookmaking groups like Ladbrokes, Boyle Sports and Paddy Power have been involved with Minister Coveney's department in the process, although they are understood to be unhappy with the outcome.
The deliberations on tax and online operators is a long-running issue that has been repeatedly discussed and debated in Ireland, with the practicality of enforcing such a tax regime on offshore companies operating over the internet and through mobile devices a serious problem for the authorities.
Traditional shops argued earlier this year that given the sharp decline in their business, a turnover tax is not viable.
The latest figures show that from a high of Euro 3.66 billion in 2008, turnover in shops fell to about Euro 2.7 billion last year. In the same period, online and telephone betting revenue rose from Euro 700 million to Euro 900 million.
Revenue from betting duty has been declining. In 2001, betting returned almost Euro 70 million to the State but that has since plummeted to under Euro 30 million.
Paddy Power, whose 2011 financial report showed that almost 80 percent of its profits are now generated by online operations, told the newspaper that the success of the tax would hinge on how it was policed.
"It is essential that it is a level playing field. It will need to be robustly policed to ensure everyone pays the same. We have no problem paying tax on our online earnings, we realise the situation the country finds itself in," a spokesman said.