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(3A) The Treasury must, before the publication of the 2009 Pre-Budget Report, prepare and lay before the House of Commons a report on the impact of the increase in bingo duty under subsection (2) on the competitiveness of licensed bingo clubs.
Stewart Hosie: The amendment seeks to introduce fair taxation for bingo, in the light of the increase in bingo duty from 15 to 22 per cent. For the gaming or gambling industry, that means that whereas online bingo, casino and poker, online sports betting, sports betting in a betting shop, football pools and betting exchanges are all taxed at 15 per cent., licensed bingo clubs, almost uniquely, are taxed at 22 per cent. I say almost uniquely because casino gaming duty is levied on a sliding scale between 15 and 50 per cent., but I will return to that subject later.
As many hon. Members will knowalthough there are almost no Members here on the Labour Benches, apart from the long-suffering Minister and a Whipthere has been an ongoing campaign for fair taxation on bingo, in order to remove the double taxation of VAT and bingo duty. What at first glance appeared to be a success, with the removal of VAT, now seems to have been merely a sleight of hand by the Government. With one hand they have given, by removing VAT, but as the industry claimsand I believe that the numbers stand upthey have taken away a great deal more by raising bingo duty to 22 per cent.
As I understand it, the Government claim that the changes will benefit the industry to the tune of some £15 million a year. My argument is that that calculation is rather flawed. That flaw is rooted in the Treasurys shortcoming in being unable to identify the VAT charged on games of bingo. As I understand it, the net effect of the changes is that Mecca Bingo alone, which represents about one third of the sector by value, will pay an extra £6 million a year to the Exchequer, with about £18 million paid across the whole industry. That is in the context of a sector that last year made an operating profit of £41.8 million.
It would be instructive to take a look at the background to the changes proposed in the Budget and the Finance Bill. In May 2008 the VAT and duties tribunal ruled that the application of VAT to interval bingo in Mecca bingo clubs was in breach of the EU principle of fiscal neutrality, which states that similar services should be taxed equally. As a consequence, Mecca Bingo and other bingo operators ceased to pay VAT on interval bingo. The benefit of the VAT abolition therefore applies only to main-stage bingo, which represents only about one third of all bingo by value. The increase in bingo duty affects all bingo, whereas the reduction in VAT benefited only one third of the revenue.
Mr. Brian Binley (Northampton, South) (Con):
Does the hon. Gentleman agree that this is an iniquitous tax, being paid mostly by the elderly grandmothers and
people of that sort who frequent our bingo halls? Are the Government not being unkind to that group of people?
Stewart Hosie: I shall talk about the social costs and benefits of what was the iniquity of double taxation, and what remains the unfairness of this particular tax. I am sure that the hon. Gentleman will be able to speak to his constituents in his own way to describe how unfair these proposals are.
Mr. Don Foster (Bath) (LD): The hon. Gentleman referred earlier to the Governments claim that there would be a £15 million benefit to the industry. Anyone who has studied page 153 of the Red Book will see that the abolition of VAT on participation fees would save the industry £50 million. He has rightly pointed out that VAT is no longer charged on interval bingo. Will he ask the Minister to intervene to tell us whether the £50 million included that change in respect of interval bingo? That is the key issue.
Stewart Hosie: That is a very important question. The fundamental point is that there has been an inability to count the VAT; it has been assessed, or calculated. The industry advises us that the Treasury has overestimated the historic levels of VAT, but if the Minister would like to clarify that point, I would be delighted to give way to her.
Angela Eagle: I can clarify the costings in the Red Book: they work from the law as it stands prior to the changes in the Budget. The law refers to the status quo of having VAT on participation fees, notwithstanding the results of the tribunal, which are still due as the considerations are ongoing. I hope that that makes it clear that the costings relate to the status quo prior to the Budget.
In the absence of what many would consider to be accurate informationwhether or not interval bingo was includedor a correct calculation of the VAT to justify the increase, my judgment would be that the principle of fairness should apply. Licensed bingo clubs should therefore be taxed at 15 per cent., which is comparable to the rate applied to the other forms of gaming that I described earlier. That is what my amendment seeks to achieve.
I seek to achieve that also for the reason that the hon. Member for Northampton, South (Mr. Binley) mentioned earlier. The importance of bingo in our communities cannot be overstated. I can think of many instancesincluding one in my own constituencyof licensed bingo clubs that are secure, and in which proper investment has been made providing good-quality entertainment, particularly for women and particularly in the middle of working class communities. To lose those facilities and that capacity would be devastating for social cohesion in certain communities.
In my constituency, a well-managed and organised bingo hall provides highly subsidised food for people. Many of my elderly residents go along there at 12 oclock, have a well-prepared lunch, then stay on for
the entertainment at a relatively cheap rate until 4 oclock. That is almost a social benefit, and that should be taken into account by the Government.
Stewart Hosie: That is absolutely right. We cannot overstate the social importance to certain communities of well-run licensed bingo clubs. There is no question about that. The loss of such clubs would be devastating.
In many of these communities, the clubs provide not only entertainment and community cohesion but valuable jobs. I am sure the Minister will correct me if I am wrong, but the previous argument was that if someone who worked in a bingo club lost their job, they were likely to be absorbed into the work force elsewhere. However, at that time there were perhaps 600,000 or 700,000 vacancies on the books. Now that unemployment stands at more than 2 million and the number of vacancies on the books is shrinking, I am not convinced that that argument still holds water.
Bob Spink (Castle Point) (Ind): Timing is not the only issue. The tax is pernicious because it is a tax on elderly and frail people. The only time that my elderly mother got out of her house to meet other people during the week was when she went down to the bingo hall in Halifax, where she enjoyed a social life. That kept her in her own community, safe, off social service benefits and out of the NHS. The tax will cost the Government money in the round; it will not save them any money.
Stewart Hosie: I hear what the hon. Gentleman says. I am trying to make the fiscal case, and I hope he has not overstated his position, but I have made the point that bingo clubs are vital in many communities, particularly to women. In certain communities they provide an afternoon as well as a night-time economy. They are extraordinarily important.
I was talking about employment levels and the importance of jobs in the communities concerned. We have seen 31 bingo halls close recently. I think that one closed very recently in Montrose, in the constituency of my hon. Friend the Member for Angus (Mr. Weir). That was a loss, and it involved a loss of jobs. We have seen 4,000 jobs go from the sector in the last six years, and in many cases it was argued that that was a result of the double taxation. Goodness knows what would happen now, with this unfair taxation. We do not want any more jobs to gocertainly on that scalein the middle of a recession. There are many, many arguments for ensuring that the tax regime is fair, and that bingo clubs stay open to provide social life, community cohesion and employment.
I said at the outset that bingo was taxed unfairly in comparison with many forms of gaming, and that casino duty was applied on a sliding scale, rather like income tax. The first £1.9 million of revenue in a six-month period is taxed at 15 per cent., the next £1.2 million is taxed at 20 per cent., and so on through the bands30, 40 and 50 per cent. I understand that even if bingo were taxed on that basis, all clubs would pay tax at 15 per cent. I am sure that if there were a super-club making huge amounts of money the levies would be high, but it strikes me that, given that all online betting and betting shop gaming is taxed at 15 per cent., given that even if bingo were taxed on the same basis as casino duty it would be taxed at 15 per
cent., and given the social importance and importance to community cohesion and jobs of bingo halls in many of our constituencies, fairness alone should dictate that the duty should not be raised to 22 per cent. I hope that the Government will view that suggestion sympathetically, not least given the difficulties over what is happening to VAT, on which they seem to be basing their calculation of any benefit conferred on the industry by the tax increase.
Mr. Eric Illsley (Barnsley, Central) (Lab): It is a pleasure to follow the hon. Member for Dundee, East (Stewart Hosie), who gave a very good account of the present state of bingo taxation. As he said, over the last few years attempts have been made to remove the iniquity of the double tax. He will probably recall that last year there were meetings between Members and the Prime Minister, the Chancellor and my hon. Friend the Exchequer Secretary with the aim of removing VAT on participation fees, which is where the double taxation occurred: bingo clubs were paying VAT on participation fees while also paying gross profits tax.
Last years campaign to reduce the burden on bingo clubs was unsuccessful, although, as the hon. Member for Dundee, East pointed out, a number of clubs were closing. In my constituency, one of the Gala bingo clubs closed towards the end of last year. We lost a valuable facility, which I will come on to in a moment.
Mr. Hands: I think that the hon. Gentleman mentioned meetings with the Prime Minister. May I take him back? If I am not mistaken, the hon. Gentleman asked about the matter at Prime Ministers questions on 25 July 2007. The question was about the taxation of bingo. The Prime Minister agreed to meet with him and a delegation, but my understanding is that when the meeting happened no Treasury officials were there, even though there was a clear undertaking that it was about the taxation of bingo.
Mr. Illsley: We did have a meeting with the Prime Minister, but at the same time we had a meeting with the Chancellor of the Exchequer and with the Exchequer Secretary to the Treasury. We also met with the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Bradford, South (Mr. Sutcliffe), because of his departmental involvement in the matter. Therefore, it is not fair to criticise the Government on the grounds that there was no Treasury involvement; there were detailed meetings with Treasury Ministers at the time of that delegation. However, the hon. Gentleman is right that the Prime Minister agreed to that meeting.
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