Hammond eyes tax hike for offshore gambling companies
Chancellor Philip Hammond is set to increase the tax paid by offshore gambling companies in his Budget later this month, in a move that will infuriate the industry.
According to the Financial Times, Mr Hammond has drawn up plans to increase the so-called remote gaming duty paid by overseas operators who offer online casino-type games such as blackjack.
The move will, according to government aides, raise about £1billion over five years.
While the move, if confirmed, will not be welcomed by the industry, it is unlikely to have any additional negative impact on Gibraltar's gaming sector given that the increase will be applied across the board.
"It won't hurt us more than anyone else," one industry source said.
According to the Financial Times, the money will help to fill a fiscal black hole left by the government’s decision to crack down on the fixed-odds betting terminals that are played in high street bookmakers.
Ministers announced in the summer that they would cut the maximum FOBT stake from £100 to £2 in a bid to tackle problem gambling after a prolonged row within Whitehall.
Some figures inside the government argued persistently that the move could prove costly for the exchequer given that FOBTs account for annual taxes of about £400million on revenue of £1.8billion.
In the end Mr Hammond gave the go-ahead to Tracey Crouch, sports minister and main advocate of the FOBT action, on the basis that any tax revenue gap would be plugged elsewhere.
Mr Hammond is expected to announce a range of revenue-raising measures on October 29, as he seeks to present a Budget that will pave the way for an end to years of austerity.
The gaming industry is braced for Mr Hammond to lift the remote gaming duty from its current level of 15 per cent of “gross gambling yield” — a measure of profit — to 20-25 per cent.
FOBTs are currently taxed at 25 per cent.
That could be enough to raise about £1billion over half a decade for the government’s coffers, the Financial Times reports.
The remote gaming duty was originally brought in several years ago as a way to level the fiscal playing field between UK-based gambling groups and their competitors offshore. It applies to the gross profits of any gambling company with UK-based customers.
Some of gambling’s biggest operators have set up online operations based in Gibraltar, including Ladbrokes and William Hill.
“This means it’s a double whammy for UK operators because they’ll be hurt by the FOBT move and now this as well,” one industry executive told the publication.
The government took action on FOBTs because some gamblers were losing thousands of pounds a day, betting up to £100 every 20 seconds on games such as roulette.