Racing industry criticises failure to raise tax rate

BETTING:THE DECISION to leave the betting tax rate unchanged at 1 per cent while also outlining plans to extend the tax net to off-shore and exchange betting has been described as a "curate's egg" budget for the Irish horse racing industry.

Bloodstock industry groups had argued for the extension of the tax net to overseas-based betting organisations but also a doubling of the tax rate.

They got one of their wishes with the Government’s commitment to put in place mechanisms to tax foreign-based and internet bookmakers welcomed by Horse Racing Ireland chief executive Brian Kavanagh.

However, there was also a sting in the tail for racing’s ruling body which faces a €1.6 million cut to its funding for 2011 after Brian Lenihan yesterday slashed the Horse Greyhound Fund by €2 million (3.3 per cent) to €57.3 million. That is a fourth cut to HRI’s finances in three years.

“Those cuts confirm that the current funding system can’t work in the long term. Betting can fund racing and we welcome the broadening of the tax base . . . But the 1 per cent rate is not sufficient to support current funding, let alone allow the industry grow. In that sense, it’s all a bit of a curate’s egg,” Mr Kavanagh said.

Bookmakers welcomed the decision to not raise betting tax but stressed the need for that tax to be enforced across the board.

“Otherwise it becomes a nonsense and a tax on Irish-based operators, which is basically us and Boylesports,” Paddy Power of the Paddy Power organisation said. “Countries with deeper pockets than Ireland, such as the US, Germany and Australia, have attempted enforcement measures on international internet operations with very limited success.”

However, he added: “The important thing was to not pitch the tax rate too high. If it was made too draconian, then foreign operators would have been encouraged to try and avoid it. This way people are encouraged to opt in.”

There is some uncertainty over how betting exchanges will be taxed but HRI’s immediate concerns centre on implementing further cuts to an industry already feeling the impact of the recession.