Top British gambling industry executives have warned the British government that tax increases and tighter regulation on fixed odds betting terminals could have a detrimental effect on the industry that could be manifested in closed shops and lost jobs, reports The Telegraph newspaper this week.
Tax and restrictive measures would not only initiatiate business cut-backs, but also undermine the ability of British gambling groups to effectively compete with offshore rivals, warned Chris Bell of Ladbrokes, Gala Coral's Neil Goulden and Ralph Topping of William Hill in a meeting with Minister of Sport Gerry Sutcliffe and Angela Eagle, Exchequer Secretary to the Treasury the newspaper reported.
The government officials were informed that the industry directly employed 40 000 people and supported a further 60 000 jobs in racing and other betting-dependent industries an that British companies might be forced to consider re-locating if tax and regulatory burdens became too onerous.
The meeting took place against a backdrop of speculation that government was considering a raise in gross profits tax from 15 percent to 17 percent and the introduction of tougher regulations on fixed-odds betting terminals.
The executives made a presentation to the government representatives, drawing attention to the GBP 920 million bookies pay annually in direct taxes, including corporation tax, gross profits tax and VAT – a figure that tops GBP 1 billion when local taxes are included. Betting companies also contribute more than GBP 130 million a year in levies to the horse and greyhound racing industries, while providing sporting events with GBP 100 million via sponsorship and other commercial arrangements.
"Analysis by London Economics indicates that an increase in gross profits tax from 15 percent to 17 percent would result in the closure of 845 betting shops and see the loss of 3 190 full time jobs," the bookies warned in the presentation. pointing out that the recession was already hurting 2 500 of the UK's 8 600 shops that are making less than GBP 30 000 profit per year.
The industry delegation emphasised the "severe competitive pressures from offshore operators paying little or no tax or levies", such as the Internet and telephone businesses of Irish bookie Paddy Power and Gibraltar-based Bwin.
Paddy Power, for example, routes such bets via servers on the Isle of Man, paying only 1.5 percent tax on gross profits – a saving that it can then recycle into advertising and into offering better odds to UK punters.
Warwick Bartlett, the Association of British Bookmakers chairman, said: "The problem is that the tax rate on e-gaming is too high in the UK." He added that bookies were having to reconsider whether they could remain located in Britain.
"They are reaching a tipping point," Bartlett said. "It's not a question of what they want to do. They have got the staff here, the expertise here and the infrastructure here. But they may not have a choice. Their shareholders are going to start asking what are you doing here?"
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