Rachel Reeves’ proposed gambling tax hike will cost up to 40,000 jobs according to recent analysis.
The Betting and Gaming Council (BGC) commissioned EY – a firm specialising in economic modelling that advises companies and governments on tax – to explore the proposals published earlier this year by the Institute for Public Policy Research (IPPR).
Reeves, Chancellor of the Exchequer, has argued gambling operators “should pay their fair share” and believes higher duties on the industry can fund scrapping the two-child benefit cap which restricts tax credit and universal tax credit to the first two children in most households.
The IPPR thinks Reeves could raise £3.2 billion extra per year in her Budget if creating one single rate for online gambling tax. As of today, operators are taxed at 15% of gross profit on racing and pool betting which increases to 21% for casino games and slot machines.
Reeves is expected to combine the two with a levy higher than 30% in her Autumn Budget. EY aren’t the only analysts to fear that plans for tax harmonisation could actually backfire and lead to a reduction in income for the government.
EY concluded that the proposed tax increases would not raise anything like the sums the IPPR estimates and it would risk the loss of 40,000 jobs, almost half the 109,000 people currently employed directly and indirectly by the industry.
£8.4 billion of consumer spending could be diverted to unregulated, unlicensed operators and in July it was revealed 28% of UK gamblers could head for the black market.
EY believes the government will generate just over £1 billion in extra tax in the short term but when factors like job losses, lower corporation and National Insurance contributions as well as closed betting shops are taken into account – the haul could account for less than £500 million.
Betfred were the latest firm to threaten to shut all betting shops across the United Kingdom if plans for tax harmonisation are made official.
Joe Lyons is a betting industry writer for GamblingIndustryNews with years of experience on reputable gambling websites. Joe specialises in long form content in the world of sports betting and gambling. Joe is recognised as an expert in sports fields such as horse racing, soccer, NFL and NBA.
