Labour peer Lord Puttnam has called for the proceeds from the forthcoming point-of-consumption tax on online gambling to be funnelled into supporting the creative industries in the UK.
Citing the “enormous growth in the gambling industry, particularly online gambling” the former film producer and boss of Colombia Pictures argued in the Yorkshire Post that the tax monies raised by a point-of-consumption tax on online gambling could be used to support UK investment in the arts, culture and sports.
Puttnam argued that earmarking the funds for cultural causes would be an effective way of “harnessing what may well prove to be a worrying rise in gambling activity, and allow it to become something which is of economic, social and cultural value to the nation as a whole.”
Based on the current rate of 15% of gross gaming revenue levied on an estimated 2011 market size of £1.7bn, an online gambling tax based on location of consumer rather than company would raise £256m in proceeds for the Treasury, although this in practice would be lower given that a number of smaller operators will likely continue targeting the GB market without a licence from the UK Gambling Commission.
While Puttnam admitted that such a proposal would require full cross-party support, he argued it would be a “massive mistake” if they let The Gambling (Licensing and Advertising) Bill 2013-14 gain Royal Assent without exploring this possibility.
According to an Arts Council report last month, the arts sector provided a seven times return to the UK economy for every £1 of government subsidy. The Department for Media, Culture and Sport however plans to cut funding for the council by 30% by 2014/15.
The bill had its first reading in the House of Commons on 9 May. This would require “all operators selling or advertising into the British market, whether from here or abroad” to hold a UK Gambling Commission licence. The Department for Media, Culture and Sport’s top mandarin said in March that the new regime could be in place as early as April 2014.
HM Treasury has yet to confirm the level of the accompanying tax licensees will be compelled to pay on business generated by British consumers, however its modelling assumes a continuation of the current 15% GPT.
Following the offshore exodus to Gibraltar of Ladbrokes, William Hill, Betfair and Gala Coral in recent years, Bet365 now stands alone among the UK’s major operators in paying this duty - on all of its sportsbook GGR - but since April 2012 has benefitted from double tax relief, offsetting its tax liabilities under other licences held in Denmark, Spain, Australia and the German Land of Schleswig-Holstein.
Puttnam also justified putting future tax revenues from online gambling to this use on the basis that the main protagonists’ online arms were based offshore, “making little contribution to the overall, long-term prosperity of the country”. His perspective however disregards the fact that most of these businesses still employ thousands of staff in the UK.
Article written by Peter Holmes
