DUBLIN: Broadly debated betting tax hike was rejected by the Irish Minister for Finance Paschal Donohoe, local media reported on Wednesday. Betting operators will still be taxed on 1% on their revenue in 2018.
However, Minister Donohoe confirmed that a change in the way licensed bookmakers are taxed by the government of Republic of Ireland may be introduced in the country’s budget plan for 2019.
As mentioned above, gambling companies that are licensed to provide betting services to Irish customers are currently paying 1% on their annual revenue. There has been pressure from concerned parties that the rate be increased at least by one percentage point. Here it is important to note that Ireland’s betting tax is among the lowest in Europe and the rest of the world.
As part of discussions over the preparation of Budget 2018, the Department of Finance introduced earlier this year three options for the future of Ireland’s betting taxation regime. If any of these had been adopted as part of the country’s budget plan for 2018, it would have resulted in additional proceeds of around €50 million being raised from locally regulated bookmakers.
The first option, which was also the most popular with lawmakers, proposed doubling the current 1% rate. The second option, as revealed by Minister Donohoe, suggested the introduction of a completely different system that would have taxed bettors instead of bookmakers.
And the third and final one included replacing the current taxation base with a new one. As explained above, the government taxes operators on a portion of their revenue. The new system would have taxed licensed bookmakers on a portion of their gross profit.
The proposed 1% tax increase turned out to be the most popular with lawmakers. However, it was heavily contested by the industry. Bookmakers warned that such an increase could inflict great damage upon the industry and those employed by it. Job losses and closure of businesses, particularly of ones run by smaller, independent operators, were among the reasons against the tax hike presented by betting licensees.
Following the news about the potential increase of the current betting tax, the Irish Department of Finance received 13 submissions against the proposal. Eight of these came from betting industry stakeholders and two were filed by the country’s horse racing industry. The other were submitted by a service advocating for the interests of gambling addicts and by individuals.
The proposal that involved taxing betting customers also faced arguments against its implementation. It was believed that such a move could result in bettors moving to unlicensed operators to avoid being taxed. Minister Donohoe was also provided with instances of other countries taxing bettors and the negative consequences they had suffered from that.
As for the proposed gross profit tax, Minister Donohoe was informed that its implementation would require significant preparatory work. However, he was told that such a tax would be of “advantage to business” as the payable tax levels will thus respond to margins.
As a response to the information he was provided with in relation to the proposed changes in Ireland’s current betting taxation system, the country’s Finance Minister eventually decided that a betting tax review would not be part of Budget 2018, and that he would consider the move next year when discussions over Budget 2019 commence.