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Mr. Fallon: It sounds as if the casino in my hon. Friend's constituency is a middle-ranking casino in terms of income, and he is describing an increase of more than 50 per cent.--the information provided to the House of Commons. I can assure him that that sounds right. Middle-ranking casinos in the capital or the provinces are facing increases of more than 50 per cent.
Sir Teddy Taylor: My hon. Friend is absolutely right. The way in which the tax will apply will not impose a straight increase of a certain amount, but one which varies from place to place. In Southend, we have one of those middle casinos. I have never had the opportunity of
playing in it, but I have seen around it. Those in charge appear to be good employers who appear to run a good business.
In a seaside town--where things can be tough and where unemployment tends to be high--it seems irrational to impose the increase. In London clubs--where exciting people come from overseas countries, and where they appear to be wealthy--one might see that there is an opportunity to get more tax. It seems rather unfair on an organisation that has spent an enormous amount on investment and is a major employer in our area.
The second point that I hope the Financial Secretary will bear in mind is that, in taxing alcohol and cigarettes, the increase can be passed on to the customers. There is simply no way in which casinos can do that. It might be possible in the long term for the club to put up the amount one pays to become a member, but even that amount will be limited.
Thirdly, the Financial Secretary should be aware that the company is a substantial employer. The Westcliff sporting club provides an academy which trains 150 persons a year. It has had little co-operation from the authorities in providing what it regards as a major public service. It also pays a substantial amount in value added tax; as you know, Mr. Lord, casinos have to pay VAT even on bad debts, which are not recorded.
I appreciate that there have always been some doubts in the House of Commons about the validity of casinos. Some people think that, like smoking, casinos are a bad thing which should be banned. Of course, they have a perfectly good case. Others think that casinos should be encouraged. However, as we have these activities, it seems desperately unfair to impose massive sudden tax increases and to apply them in such a way that particular casinos in particular areas are hit particularly hard. Such a massive increase is unfair on Southend-on-Sea.
We are already very restrictive in the case of casinos. For example, unlike other industries, we do not allow them to advertise. As the Financial Secretary is also aware, this tax is not on profits, but on gain before costs.
I appreciate that Governments who want to get a lot of money sometimes look around for obvious targets--the sort of thing about which people might not complain--but the basic question is: is the Financial Secretary confident that this extra money can be secured without jobs being destroyed, without some casinos having to close and without some reduction in the industry?
If the industry is simply a sitting duck with lots and lots of money everywhere, one can appreciate that the Government may have a case, but I have a feeling that they have gone too strong on this one and that they have introduced it in such a way that it is particularly unfair to particular places. Of course, I feel very upset that Southend seems to be hit harder than other areas. I hope that the Financial Secretary will examine that.
What can the Financial Secretary do? I appreciate that, in such debates, it is unusual for Ministers to say that they are going to overturn their decisions and change the Budget. However, I hope that she will say that she will examine the impact of the tax as it applies to particular areas, or at least that she has open mind on how the measure might be applied. Changes can be made if things are unfair.
I appreciate that, like all Governments--goodness knows, I had plenty of arguments with the previous one--the Government do some bad and some good things, and sometimes make mistakes because they are under a lot of pressure. I feel that, in this case, a mistake has been made. Unfairness has been introduced and I therefore hope that the Financial Secretary will say that she will reconsider the matter and at least keep an open mind on what is a serious issue for the people of Southend-on-Sea.
Mr. Edward Davey:
Until earlier today, my personal knowledge of the casino industry was, to say the least, limited. I am not someone who is taken with gambling. I may be the only hon. Member who has yet to buy a national lottery ticket. That is not, I hasten to add, because I have something against gambling; I do not wish gambling to be banned. It is more because, as a modern economic man, I take my decisions on a rational basis, and it is clearly irrational to gamble. It is only justified as a consumption good. Some people like the experience of gambling and want to spend money on it. That is fine for them, but I choose not to.
There are concerns when gambling becomes an addiction; that is why this and past Governments have sought to regulate the gambling industry. However, in this measure, the Government are not showing particular social concerns. People who use casinos, particularly London casinos, are international gamblers who cross the globe to gamble. I do not think that the Government's aim is to help those people with their gambling problem. It is clear that the Government want to raise revenue; that is the main point of the measure. However, they are going about it in the wrong way.
As other hon. Members have said, this is a large increase in a very short time. That is a bad way in which to introduce any new tax and, for the casino industry, it is particularly bad. It will affect a small number of businesses very severely immediately. As the hon. Member for Rochford and Southend, East (Sir T. Taylor) has said, it will result in people losing their jobs. That will happen not just in constituencies such as his and those of my right hon. and hon. Friends who have coastal constituencies where there are casinos for tourists, but in London. I have constituents who work in the casinos in central London, and they are concerned that the tax may lead to their losing their jobs.
As the hon. Member for Rochford and Southend, East said, it is difficult for the tax to be passed on. I have had to refer to other sources to understand that, because tax increases can often be passed on to the consumer. Apparently, the edge that the house has over the player is laid down by law, ranging from between 0.6 and 5.6 per cent. in blackjack to between 1.5 and 5.6 per cent. in dice, so the tax cannot be passed on.
To recoup their investment, the business owners will have to make efficiencies elsewhere. Their main costs are staff and property, so staff will be made redundant. That causes a problem for the underlying commercial health of casinos, because it is important for the industry to have in-built inefficiencies. To attract people into the casinos in one capital city rather than another, they have to have subsidised food and lots of people pandering to the punters' every need. Laying off staff may undermine casinos' long-term health.
The other danger is that gambling could be driven underground. The Gaming Act 1968 was supposed to prevent mafia-type underground gambling operations,
with all their appalling implications. I am sure that the Government are not trying to push gambling back that way, but such a huge increase in so short a time could lead in that direction.
The Government are in danger of killing the goose that lays the egg. Revenues may decrease in the medium term, as casinos close or high-income gambling operations go out of the regulated sector.
We shall oppose the Government and support the amendment. I am sure that the Government will defeat the Opposition's combined efforts, so I shall propose an alternative that they should grasp, in the form of the improvements in the regulatory regime to which the hon. Member for Sevenoaks (Mr. Fallon) alluded.
In the dying days of the previous Government, the Home Office published some sensible proposals ina document, "Second Consultation on Casino Deregulation", which would have been implemented in the unhappy event of the Conservatives being re-elected. The proposals would have made it easier for people to apply for membership of a casino on the night or by post, and enabled casinos to market their services in a limited way. There are huge restrictions on what casinos can and cannot advertise, and the proposal was for very minor deregulation. The consultation process revealed little opposition to that, and I believe that it should be pressed ahead with.
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