UK tax cuts to lure online gambling operators back to Britain?
News on 9 Dec 2012
News on 9 Dec 2012
Quoting unnamed sources that appear to include a senior government employee, The Mail on Sunday reported over the weekend that the British government’s Treasury department is “….set to hand the gambling industry a multi-million-pound tax cut as part of an incentive to bring the offshore internet gaming business back to Britain.”
Seven years ago the then Labour government introduced a 15 percent tax for all internet betting, a rate that several major British online gambling groups warned made them uncompetitive in a tough global market.
A number of these major companies subsequently moved their internet operations to more tax-friendly offshore havens like the Isle of Man and Gibraltar.
Now the Mail on Sunday claims that Treasury is considering cutting the tax by a third in an effort to lure companies back to Britain, thus recouping some of the estimated GBP 2.1 billion in lost revenues over the last seven years.
The British government is currently pressing ahead with a new “point of consumption” taxation and regulatory regime designed to deny access to the British market unless operators have a UK Gambling Commission licence and pay tax.
The newspaper says that the controversial tax cuts – if true – follow an outcry in the UK over tax-smart corporates like Starbucks, Google and Amazon which have allegedly avoided UK tax through clever financial, organisational and corporate planning. Moves to clamp down on these practices are being mooted.
Fair tax campaigners reacted to the Mail on Sunday report by criticising any new tax concession to the internet gaming industry on social and fiscal grounds.
“Opponents to the tax concession point out that other EU countries impose higher gambling taxes of 20 percent and, in the case of Germany and America, have laws that greatly restrict all online gambling,” the newspaper notes.
A senior government source told the Mail on Sunday that the Treasury is close to accepting the argument that the rate on internet gambling should be slashed by a third.
The newspaper claims that eighteen of the 20 major betting companies operating most of the gambling websites in the UK use offshore bases like Gibraltar to market and operate their services.
“On the Treasury’s own estimates, a five percent cut would save the companies nearly GBP 100 million in tax each year,” the newspaper reports, going on to quote the source as saying that the argument for lowering gambling taxes from 15 percent to ten percent was almost won.
“There are two separate arguments – what is the appropriate rate of tax and should people pay it?” the source told the Mail on Sunday.
“On the second of those two questions, the answer must be a firm yes. I’m all in favour of lower taxes but we have got to work out how it is going to be paid for. There is an argument that you should lower taxation in order to incentivise the firms to come back.”
Reasons for bringing the internet divisions back under British regulatory control include better regulation against under aged gambling, problem gambling and other internet scandals; better player protection and improved scrutiny on match-fixing.
