Profits tax amendment to be debated in Irish Parliament
A proposal to replace the controversial doubling of the turnover tax paid by Irish bookmakers with a new profits tax is among three Finance Bill amendments due to be debated in the country’s parliament this week.
Ireland’s betting industry has predicted the collapse of the country’s betting industry since Finance Minister Paschal Donohoe delivered his Budget last month. Under government plans gambling turnover tax would rise from 1% to 2% on January 1st, a hike that would lead to 400 betting shops closing down and 1,500 jobs lost according to a report commissioned by the Irish Bookmakers Association (IBA).
Independent Member of the Dáil Éireann Michael Healy-Rae has now put forward an amendment to the Budget that backs the IBA’s alternative proposal for a 10% tax on gross profits for shops, and a 20% rate for online operators. The IBA believes this change would raise the industry’s tax contribution by €25m while allowing businesses of all sizes to remain viable.
The amendment is scheduled to be debated on Tuesday night, though it could be delayed until later this week. Many successfully regulated jurisdictions, including the UK, base tax on gross profits rather than turnover.
Also up for discussion are Sinn Fein’s call for a tax on stakes and Fianna Fail’s suggestion that the implementation of the new tax rate in January must be accompanied by a three-month economic assessment of its impact.
iGamingBusiness.com understands that the IBA is still attempting to convene a meeting with the Department of Finance ahead of the Finance Bill vote, expected next week, to outline the extent of its concerns and put forward its alternative proposals.
Sharon Byrne, the chair of the IBA, said she is “not optimistic” that a U-turn is likely ahead of the Finance Bill vote, although she believes the new tax rate does not have a long-term future.
“They will have to reconsider it at some stage, but if it’s after January 1 then it’s already too late,” she told iGamingBusiness.com. “We’ll keep the pressure up. We just want to show them that there’s a way to change the taxation regime but also save jobs.
“This tax change is bad for business, bad for the consumer and bad for horse racing, with less set to be wagered with licensed operators on races.
“It’s particularly bad for the little guy with small shops becoming unviable. The consumer will no longer get that local, personalised service.
“We’ve seen from Ladbrokes’ announcement [about closing on-course shops] that even the biggest businesses have major concerns.”
The Government plans to use the tax hike to increase funding for problem gambling treatment and the racing industry.
Horse Racing Ireland is one party that backs the Government’s tax plan. It believes Ireland is simply looking to bring its operators’ tax contribution more in line with other European jurisdictions.
HRI chief executive Brian Kavanagh said last month: “The rate is a lower rate of tax than applies in other jurisdictions. Upwards of 85% of turnover in the country is generated by three multinational companies, so that’s a feature of the market as well.”
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