Clause
19Rates
of gaming
duty Question
proposed, That the clause stand part of the
Bill.
Mr.
Hands: I just have a couple of points to raise on the
clause.
The threshold
increases, as outlined in clause 19, are in line with inflation; we
have no particular issue with them. However, I would briefly like to
raise with the Minister the relationship between gaming duty and remote
gaming duty. In a written parliamentary answer, she told the hon.
Member for Bournemouth, East (Mr. Ellwood) that
“HMRC
are not currently able to publish a breakdown of remote gaming duty
while maintaining taxpayer
confidentiality.” Now
that strikes me as a very curious answer. Real casinos cannot move
offshore, but online casinos can. Is it really the case that the
Government are raising so little revenue from the internet form of
gaming duty that saying how much they are getting would compromise
individual operators? I would appreciate an answer to that question, but
other than that I have no comments to make on clause
19. Mr.
Syms: Clearly some of the international, Gibraltar-based
type organisations that have been raising internet gambling have been
hit on by the American taxman. One presumes that there might be an
issue if we have what is, essentially, a British company being hit by
other tax authorities. Why would we not want to say what we are
actually raising? It is an interesting area to explore—if one
can possibly explore it, since tracking people down on the internet is
not a terribly easy
area.
Angela
Eagle: We could have long and interesting discussions
about the effect of the world wide web and offshoring on all sorts of
tax regimes. It is something that all tax jurisdictions have to think
about and develop policy approaches to in the future as the capacity
for giving those services offshore, in areas that are not in the
current definitions of tax areas, expands and the potential for doing
that in many other areas increases. Gaming is one such area.
The
hon. Member for Hammersmith and Fulham asked about taxpayer
confidentiality in remote gaming duty. The fact is that one large
taxpayer accounts for a huge share of total remote gaming duty
revenues, and to provide those figures would effectively expose to
public view the tax liability of an easily identifiable taxpayer, which
is why I could not answer the
question.
Mr.
Syms: What information sharing is there between Treasuries
in the European Union on the issue? If one major player is generating
tax revenue, other tax authorities might have agreements over what they
do with those who are domestically based and bet. Do we all do our own
thing, or is there some kind of discussion about whether the figures
received from a particular company are accurate? I understand the
Minister’s problem if there is only one company writing a large
cheque every three months or so to cover an agreed tax liability that
has no doubt been negotiated under certain
conditions.
Angela
Eagle: Because only one large taxpayer accounts for the
bulk of the revenue in total remote gaming duty revenues, answering the
question would have disclosed its tax affairs, and we are not entitled
to do that.
Mr.
Mark Hoban (Fareham) (Con): Is it not the case that the
amount of tax that that taxpayer pays is disclosed in its accounts, and
that the information is available in that way? That would get around
the issue of taxpayer
confidentiality.
Angela
Eagle: It may well be, and we may want to talk about
taxpayer confidentiality in all sorts of ways, but the current rules
state that, as a Treasury Minister, I cannot disclose to the public, in
answer to a parliamentary question, something that effectively
identifies the tax liabilities of an obviously identifiable company,
which in UK law is a person and which is entitled to confidentiality in
its tax returns. That is the current law. As legislators, we might want
to think about how the law could be represented in the future; current
circumstances, however, mean that I cannot answer the question that was
put.
Mr.
Hands: Can the hon. Lady suggest a way in which she could
answer a question that was put
differently?
Angela
Eagle: No, that is a matter for the hon. Gentleman; I am
not going to suggest questions for me to answer. I am not quite that
devious, even though I am getting on in years. I look forward to what
comes my way as a result of these quick words, because the hon.
Gentleman is so
ingenious. Question
put and agreed to.
Clause 19
accordingly ordered to stand part of the Bill.
Clause
21Amounts
of duty on amusement machine
licences Question
proposed, That the clause stand part of the
Bill.
Mr.
Hands: Clause 21 is closely related to clause 22 and
raises the amusement machine licence duty, or AMLD, rates payable on
gaming machines. The clause is notable for the level of the duty
increases within the various categories under consideration. The
increases are not entirely uniform, but they are all significantly
above the rate of inflation. The Government have yet to explain their
reasoning for those increases, and the Red Book fails to mention the
issue at all, beyond noting the additional £20 million in
revenue that will be
raised. In
fact, page 175 of the Red Book lists AMLD among those duties rising by
this year’s third-quarter RPI, which is clearly wrong. The rises
are about 9 per cent. on last year’s Budget, and that figure is
certainly nowhere near any RPI figure that I have seen for a number of
years. For example, a 12-month category A licence rises from
£5,160 to £5,625, which seems to be a lot more than 3 per
cent. and more like 9 per cent. A six-month category C license rises
from £400 to £435. Those are rises of 9 per cent. and
8.75 per cent. respectively. We were told in the Red Book that the
rises were at the rate of third-quarter RPI. They are nowhere close
to
that. 12.45
pm The
amount of licence duty payable is determined, at present, by the period
covered—one to 12 months—and the number and category of
machines. Machines can have very different maximum prize values and
minimum stakes, and it is right that duty reflects that. The Opposition
have repeatedly drawn attention to the lack of sense in taxing highly
addictive machines, such as the B2 fixed odds betting terminals found
in bookmakers, at the same rate as the B3 machines, which are the
softer form of gaming machines found in bingo halls and gaming centres.
We have great concerns about the growth in the popularity of fixed odds
betting terminals, which appears to be aiding migration away from
arcades. In
a 2007 prevalence study, problem gambling associated with FOBTs was the
second highest form of problem gambling, with a problem gambling rate
of 11.2 per cent. My hon. Friend the Member for Putney (Justine
Greening) raised those concerns at length last year, so I will not
repeat them this year, but the minor recalibration of the duty bandings
in this year’s Budget has not addressed the problem. The Budget
announced an imminent consultation on switching amusement machine
licence
duty to a gross profits basis rather than a licence charge, but further
detail is yet to be forthcoming. It would be helpful if the Minister
said when the consultation will be launched and what options are being
considered to reflect the different machines, and their different level
of addictiveness, covered by AMLD at present. I would particularly
appreciate an explanation of why she is maintaining that the figures on
page 175 of the Red Book, which state that the rises are way in excess
of RPI, are based on this year’s third-quarter RPI. I look
forward to hearing the Minister’s
response.
James
Duddridge: Thank you for calling me, Mr.
Atkinson. I know that it is not traditional for a Whip to speak, but I
represent Southend and this measure is very relevant. There was lots of
amusement in Southend over the weekend but there was certainly no
amusement over clauses 21 and 22. I would like to probe the Minister
for more detail on the reasons for the larger than inflation increases
and to look at whether there can be flexibility on the periods for
which the machines are
licensed. In
Southend some arcades are closed during the off season but still pay a
significant amount for licences. In 2003 there was a big review of such
machines. It was decided to leave all alone and that no further
progress should be made given the difficult underlying market
conditions and the real concern about the industry as a whole. We are
looking at the changes in difficult economic times, at the height of
recession, when people are less prepared to spend money either at home
or visiting areas of entertainment and pleasure, such as Southend
seafront where there are a lot of amusement
arcades. I
would like the Minister to look at not only the amount, but the
location of machines. I have entered into extensive correspondence with
Bunter’s CafĂ(c) of 68 Sutton road—I do
not expect the Minister to know the exact case. It may sound parochial,
but sometimes looking at a specific issue shows how foolish legislation
is. Bunter’s CafĂ(c) has always had a little machine that
you could put money in and gamble, which was licensed via Southend
council. Under the Gambling Act 2005 it will not be allowed to have
that machine, but if it sold alcohol, it would be allowed to have it
with no other changes and, presumably, would pay the increased machine
licence duty. That makes no sense to me. If it is unsafe to have a
machine in a cafĂ(c), because of the type of people that will be
there, surely it is more unsafe, in terms of being addictive, if people
can have it in licensed premises. It does not seem to make sense, even
if there is an argument for children in fish and chip shops paying over
money, that there cannot be a licensed machine in a cafĂ(c) but
there can be one in a family room in a licensed pub. There seems to be
an awful lot of inconsistency.
I want to go
back to the rates. The British Amusement Catering Trade Association,
which is an excellent organisation, has questioned whether this is the
right time to be making these changes. Revenues in amusement arcades
have collapsed by 21 per cent. and I wonder whether the Minister has a
grip on the impact on the industry. I say that because on 19 May 2008
my hon. Friend the Member for Putney asked a series of questions,
requesting estimates of the number of those machines in amusement
arcades, both historically and the predicted levels in the future. The
Minister replied that there was no breakdown of the numbers of
amusement machines
in arcades or of amusement machine licence duty that is collected
specifically in arcades. If the Department does not have an awareness
of those numbers, how can it possibly assess the impact of these
changes? I can tell the Minister that there is quite a severe impact.
Amusement arcades are closing and that will mean a loss to the
Exchequer overall. Also, as more
legislation is imposed on these smaller arcades, a flood of them are
turning into bigger arcades, with heavier gambling. So, some of the
things that the Government are doing in this sector are
counter-productive, both in terms of increasing revenue and of
minimising the possibility of people becoming addicted to
gambling.
Angela
Eagle: The clause will increase all amounts of amusement
machine licence duty from 4pm on 22 April 2009 and the new amounts are
set out in the clause. The net increase in effective tax rate on
machines as a result of the clause will be about 1 per cent. Therefore,
the effective tax rate on machines will remain broadly consistent with
the effective tax rates on bingo, casinos and the national
lottery.
These changes
will ensure that gaming machines make a contribution to the
consolidation of the public finances. They also have to be seen in the
context of the regulatory changes led by the Department for Culture,
Media and Sport, which allow business to benefit from higher stake and
prize limits. Therefore, these machines will effectively be more
profitable, as it is anticipated that more people will use
them.
We increased
these rates for the reasons that I was talking about earlier with
respect to consolidation of the public finances. The hon. Member for
Hammersmith and Fulham asked about page 175 of the Red Book. That page
sets out the assumptions for the baseline against which the scorecard
costings are calculated; it is not actually the calculation itself. So
that is a definition of how the scoring is done. That was done with a
forecast of RPI in September 2009, which is the usual way that these
things are done. I hope that that answers his question.
The hon. Gentleman also asked
about the consultation. No decisions have been taken yet, but officials
have already had pre-meetings with BACTA, the organisation that has
already been mentioned by the hon. Member for Rochford and Southend,
East. We hope to launch the consultation on a potential move to a gross
profits tax soon. I cannot give him any more details at the moment, but
the process has begun with initial discussions.
The hon.
Gentleman also mentioned off-season closures. Anyone who knows seaside
resorts, as I do, will know that there is an on and an off season.
Seasonal licences are permitted for small prize machines. Those
licences basically give an eight-month licence for a six-month duty
rate. If there was a move to gross profits tax, we would also want to
take account of seasonality in the way that we levied that tax for
small machines. So that is an issue that the operators in the hon.
Gentleman’s constituency, either in the Billy Bunter cafĂ(c)
or elsewhere, can make representations about, either directly or via
BACTA. We look forward to having a productive discussion with him about
that. Question
put and agreed
to. Clause
21 accordingly ordered to stand part of the
Bill.
Clause
22Provisions
affecting amount of amusement machine licence
duty Question
proposed, That the clause stand part of the
Bill.
Mr.
Hands: Despite the fact that clause 22 is a page in
length, I only have to say that, as I understand it, it is a technical
provision that aims to align the definition of the AMLD bandings with
those used by the DCMS, as well as raising the limits. We have no
particular objection to it.
Angela
Eagle: The clause just makes certain that the benefit of
this change goes to the people who are running the
machines. Question
put and agreed
to. Clause
22 accordingly ordered to stand part of the
Bill. Ordered,
That further consideration be now adjourned.
—(Mr.
Blizzard.) 12.56
pm Adjourned
till this day at half-past Four
o’clock.
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