Concern among Irish bookmakers over potential betting tax increase in budget

Irish Bookmakers Association (IBA) chair Sharon Byrne has warned of a "very grave and uncertain future" for layers after the government's Tax Strategy Group revealed details of a proposed betting tax increase to 2.25 per cent for next month's national budget.

The group, which is chaired by the department of finance and is made up of senior civil servants, suggested that increasing the betting duty rate by 0.25 per cent would raise €11 million over the next full year.

However, the IBA says there have been 50 shop closures and 300 job losses as a result of betting tax increasing from one per cent to two per cent on January 1, 2019, with Byrne calling on the government to review the current tax situation, believing that the full extent of the tax doubling has yet to be felt.

"The Tax Strategy Group paper comes out every year in advance of the budget with options for the government to consider on all taxes, and their recommendations don't always come to fruition," she explained.

Sharon Byrne: 'The country needs to protect every job it can for the foreseeable future because we don't know what sort of recession we're going to face'Credit: Patrick McCann

"All year long we have been providing updates on the number of shops closing and the severity of the 100 per cent tax increase on jobs already.

"Our budget submission this year is around that and now we believe that while all retail – not just the betting sector – absolutely needs the support the government is giving them at the moment, we feel they're masking a lot of closures that would have happened for some operators."

She added: "We've hired Dublin City University economist Tony Foley, who has produced a paper on the economic impact and potential decrease in turnover and tax effect. We've included all that in our submission and are urging the government to review the tax because the turnover tax is neither fair or sustainable for our sector at the current rate."

An annual tax relief of €50,000 for firms was introduced upon the government's decision to double the previous rate in 2018, which could increase to €65,000 if the possible 0.25 per cent rise is implemented.

The Tax Strategy Group suggests that the tax relief arrangement "substantially" negates the increased rates for smaller firms, but Byrne said this only applies to a small number of bookmakers with few retail outlets.

Betting shops: 30 closed in Ireland as a result of increased betting tax rates, according to the Irish Bookmakers AssociationCredit: Patrick McCann

"That helps someone who owns one or two shops, and there are about 30 of those left in the country – everybody else who owns three, four or five [shops] are in dire straits because of the tax," she said.

"Even for profitable shops, not just little ones, it has wiped out a lot of their profit. Should they increase it to €65,000, it's still only materially helping somebody with a couple of shops. Once you go over that, anything over a one per cent tax is penal and is a job-killing tax.

"The country needs to protect every job it can for the foreseeable future because we don't know what sort of recession we're going to face."

According to the Tax Strategy Group, betting duty returns for July were €8.1m, in comparison to €26.9m for July 2019.

However, receipts in the year to July are almost on a par with the same period in 2019 – €59.2m versus €61.9m.

The group believes this reflects high levels of betting prior to the effects of Covid-19 taking hold in Ireland, which HRI chief executive Brian Kavanagh has noted as a key takeaway from the group's paper.

"There are a few interesting factors in that the tax increases in recent years have not impacted on the level of betting or yield from betting, and that was as we had predicted," he said.

Brian Kavanagh: 'I think it was suggested that in a full year the yield from betting tax is €113 million, whereas in 2014 that was €26 million'Credit: Caroline Norris

"I think it was suggested that in a full year the yield from betting tax is €113m, whereas in 2014 that was €26m. It also confirms that the tax rate on betting is still lower than VAT on most other goods on the high street. That's consistent with what we've said all along, so let's see what comes out in the budget."

Byrne added: "We did a survey in our association at the end of August and start of September on retail activity. While it fluctuated, with some reporting a 50 per cent decline and others a lot less, it is averaging around 30 per cent of a reduction in shop turnover compared to the same period last year.

"It's worrying because we've just finished what would have been the busiest part of our year. We're facing a very grave and uncertain future. Everyone is, it's not just us in bookmaking."

Read The Lowdown from 8.00am daily on racingpost.com and the Racing Post app for all the day's going updates, news and tips