Labour Party Considers £3bn Tax Hike for Gambling Companies

Published on:

[ad_1]

The gambling sector in the UK is currently going through regulatory changes amid the government’s efforts to make the rules suitable for the digital age. While the changes are related to the White Paper following the review of the Gambling Act, a new report suggests some gambling operators may be affected by a tax hike.

A £22 Billion Black Hole

This summer, Labour won with a large majority, taking over the reins from the Conservatives. The election result marked the first such win for the former party after more than a decade. Now, Labour is expected to create a budget, but a multi-billion-dollar “black hole” may require changes related to the taxation of certain gambling activities.

As announced by The Guardian, chancellor Rachel Reeves and ministers are exploring different options to raise gambling taxes in order to strengthen the public finances. Such a move is expected to generate an estimated £3 billion ($3.92 billion), helping address what the chancellor described as a £22 billion ($28.7 billion) “black hole,” she claimed to have discovered after assuming her role.

Data from the Betting and Gaming Council (BGC), the industry body representing the UK’s gaming and betting industry, suggests that its members support 110,000 jobs within the gambling sector, generating £4.2 billion ($5.49 billion) in taxes annually.

Gambling Activities with Higher Harm May Be Subject to Tax Increases

Reportedly, the government may consider changes to the taxes applicable to gambling activities with “higher harm.” This is why the tax hike may affect online betting and online casino games. Two proposals by thinktanks are currently being explored by lawmakers in the country.

One of the proposals calls for an increase in taxes for online gambling from 21% to 50%. Taxes on betting would also increase under this proposal which seeks to retain the taxes applicable for gambling activities with “lower harm.” This otherwise means that bingo, lotteries or other products that are considered less harmful won’t be affected.

Another proposal that is in the sights of lawmakers estimates that doubling of the taxes applicable for online gambling would generate an extra £900 million ($1.1 billion). The current rate applicable for iGaming activities in the UK is 21% but under the proposal, it would increase to 42%. The aforementioned proposal points to similar practices in other markets across the globe such as the United States.

The BGC is reportedly against the potential rise in taxes for the gambling sector. A spokesperson said on the matter: “Comparable markets abroad which have imposed draconian regulations and disproportionate tax regimes have seen a spike in illegal black market gambling.”

The gambling sector in the UK has long feared potential draconian measures. One of the main concerns when it comes to increasing taxes, imposing restrictions related to gambling advertising or other regulations, is the potential increase of the illegal sector. Many stakeholders fear that consumers are more likely to transition to the black market than go through complex procedures when it comes to online gambling.

[ad_2]

Source link

Related