Lawmakers in Ireland have made an important yet polarising decision. Their plan to double the current gambling tax could generate an extra €50 million for public spending but bookmakers are worried it could cause irreversible harm to their businesses.
Potential Harm for Irish Betting Market
In Ireland, there is currently a 1% tax on gambling turnover. The new rules will now require all gaming operators to pay 2% in taxes, which would provide the government with more money to spend in other areas. The extra tax revenue would also be used to make more resources available to problem gambling across the country.
It seems that bookmakers in Ireland are already struggling, and the increase in tax could be the final blow. Last month, the Irish Bookmakers Associate stated that the number of betting shops in Ireland has already dropped from 1300 in 2008 to just over 800 today.
The organization has recently released a statement criticizing the tax increase. It noted that there are many bookmakers out there who turnover just €2 million per shop, and they are already being forced to pay almost six times more than they are making in profits. If there is a 1% increase on taxes, they would be unable to make a profit at all. As such, over a third of betting shops across Ireland may end up shutting down as a result of the tax.
Tax Increases Across Ireland’s Hospitality Market
Gambling operators aren’t the only ones that will be hit by increased taxes. The 9% VAT paid by hotels, restaurants and bread & breakfasts will see another 2% added to it. This would result in significantly more money for public spending than the increased gambling tax, bringing in an extra €520 million.
The tax rate for hospitality venues was only temporarily decreased years ago. It was never meant to stay at 9%, as the drop was only introduced to help the struggling sector. Now that hotels and restaurants are doing well again, it seems it is time for taxes to be raised.
It is also believed that hotels won’t suffer as much as bookmakers as a result of the tax increase. Lawmakers have known for quite some time that retaining the current 9% rate was a significantly benefitting hotel operators , particularly those that charge over €300 per room. Some members even considered introducing an even high tax rate for hotels that charge over €150 per night, but that option was ruled out.
There is still time for lawmakers across Ireland to debate the new changes to the budget. However, it seems that most are on board with the increase in taxes across these sectors – so, there are unlikely to be any revisions.