APPENDIX 3
LITTLEWOODS BETTING DUTY SUBMISSION TO CUSTOMS
EXECUTIVE SUMMARY
Context—A fair basis for UK bookmakers
to compete internationally in a fast developing e-commerce environment
offering low or zero tax betting, off shore.
Government tax revenue from betting will decline
sharply if no action is taken to reform betting duty and the export
and inward investment potential from overseas business will never
materialise.
Great care must be taken to ensure that consumers
do not categorise betting as they do motor cars, alcohol or tobacco,
namely commodities which are too expensive in the UK and can be
obtained much more cheaply abroad.
A tax on place of consumption would favour overseas
bookmakers and do nothing to stop UK based customers from betting
off shore, unless a time consuming and expensive system was in
place. A trading differential similar to that in the alcohol and
tobacco industries would be created. It would therefore not meet
the first objective—"a fair basis for UK bookmakers
to compete internationally."
A tax on gross profit, unless set at an unacceptably
high level, would necessitate an unrealistic increase in current
turnover to maintain existing levels of tax revenue. It would
require rigorous auditing to prevent misreporting.
A reduction in GBD would be a welcome step in
helping UK bookmakers compete internationally, and is likely to
generate more rather than less tax revenue as anticipated in Ireland.
It would not require a new system of collection.
A reduced rate of 2 per cent for electronic
betting and 3 per cent for telephone betting would remove the
incentive for UK bookmakers to establish these businesses off
shore. Such reductions would also enable the Government to share
in the potential of these new channels at minimal risk to its
revenue.
Ideally there should be a standardised rate
of copyright and other levies for all sport worldwide of 1 per
cent. All sport would then benefit from increased turnover driven
by a low or no-tax, e-commerce betting sector based in the UK.
The GBD and Levy questions must be considered
together.
November 2000
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