Clause 6 - General betting duty
Finance Bill
5:00 pm
Mr Richard Ottaway (Croydon South, Conservative)
I had every intention of addressing the point that the hon. Gentleman just sought to make. I make no declaration of interest, other than to say that I have received advice in preparing my contribution to the debate from the Sports Spread Betting Association, one of whose members is a company that has a shareholder who has made a donation to the Conservative party.
It is clear that there is growing public resistance to paying taxes. We have seen that in the fuel protests, in the reluctance by any political party to commit themselves to raising income tax, and on the levying of general betting duty. It is a phenomenon of the past two or three years that internet and telephone betting from Gibraltar have grown extensively because firms wish to remain competitive against others that offer bookmaking services offshore, because of the growth of the use of the internet. However, the upshot is that bets placed in Gibraltar will not attract the betting duty of 6.75 per cent., nor the horse race levy of 1.25 per cent., nor the administrative costs of implementing those duties, which have resulted in bookmakers levying a tax of 9 per cent. We agree with the Government that reform is needed. The measures have been in place for around 40 years, and as I understand it, internet betting is growing and it is estimated that by 2005 off-course betting will constitute some 9 per cent. of all betting.
The proposal, as I am sure the Minister will explain in some detail, is to switch the tax from a general betting duty to a tax on gross profits, even though it is still called a general betting duty. As far as the bookmakers are concerned, the tax will be on the difference between the sums bet and the winnings. At present, if one puts £1 on at 10 to 1, one either pays £10.90 or, if one sticks at £10, one is deemed to have bet £9.10 and if one wins one gets 10 times the amount staked. What will differ is that the winnings will be subtracted from the sums bet at the bookies and a 15 per cent. tax will be levied per accounting period on the difference between the two amounts.
The tax will not be levied on the punters, but absorbed by the bookies. It will not be passed on, though I understand that the code is voluntary. Will the Minister explain what would happen if a bookmaker broke the voluntary agreement? The purpose is to encourage high-volume betting through the telephone and internet. The new levy applies per accounting period, provisionally on a monthly basis, though the Treasury has the power to vary it.
Fixed odds bookies rarely have losing months. The profit is fairly continuous from one month to the next. The competitive pressures come from rival bookmakers, but that does not apply to spread betting, which is why I tabled the amendments. I hasten to tell the Minister that they are probing amendments, designed to draw out his attitude to spread betting.
Let me explain exactly what a spread bet is. It allows people to bet not on a result, but on the incremental aspects of a result. For example, someone might bet on how many runs England will make in a cricket match.