Tax gambling, minister – society will be the winner

Sunday Tribune 6 December

The caller from Cork was outraged. He had "never seen a guard in Douglas" before, and there were two on duty at Bertie Ahern's book-signing. "At either entrance to the shop" where Ahern was flogging his life story. This was for "protection", Liveline was told. For who, I wondered: him or Cork?
Bertie definitely needs protection from Liveline's listeners. They were furious that he was being driven around, at their expense, to sign books. One signing venue that got them particularly annoyed was Newry. Isn't this where his party says only "unpatriotic" shoppers go?
The racket on Liveline won't have bothered Bertie. He has a neck like a jockey's proverbials and knows all there is to know about rackets – political ones at any rate. He's sitting on a pile of pensions and allowances and will make a bundle from his autobiography. And he won't have to pay any tax on it.
Basket Case Ireland strikes again. We blame Ahern for the economy, yet his tax-free version of events is likely to be the most-read book this Christmas. Instead of making him put a sock in it, we're putting him in our stockings.
Will someone please put Ireland back in its straitjacket? Anyway, this column isn't about Bertie not paying tax on his story-telling. It's about him not paying tax on another pastime: the horses. Remember how he revealed his fondness for them at the Mahon tribunal? How he won his unexplained cash?
Last year, Bertie and other chancers spent €5.5bn at the bookies. This was a great boost for the exchequer, right? Wrong. According to Horse Racing Ireland, €1.7bn of it was gambled, tax-free, online.
Just as well the bookies paid tax on the rest, then. What was the rate? 20%? 30%? No, they paid… 1%. Remember that figure when you read Brian Lenihan's budget cuts this week. Everything else is screwed by the taxman but gambling is virtually untouched.
Why? Because the racing/gambling industry is enmeshed with Fianna Fáil. This goes back to 1969 when Charlie Haughey introduced tax exemption for profits on stallions at stud. Thirty years later, Charlie McCreevy did the industry a favour again and lowered betting tax from 10% to 5%. Charlie's from Kildare – racing's heartland – so no bias there. In 2001, he made it 2% to "safeguard the betting industry by reducing the incentive for Irish bookmakers to move off-shore". The only stipulation was that the bookies, not the punters, would pay this nominal amount. This derisory 'tax' was then put back into racing, for prizes etc, through the new Horse and Greyhound Racing Fund. In 2002, Fianna Fáil reduced it to 1% 'just to be sure'.
It was a bit like the banks, really. Fianna Fáil gave the bookies a form of 'guarantee' so their business wouldn't collapse.
Last year, Brian Lenihan raised the tax back to 2%. The bookies cried as if it was the apocalypse. They have loud voices, bookmakers. In May, Lenihan crumbled and 'postponed' the rise to examine the impact of offshore, online gambling on the industry.
What has been the major bookmakers' response to this threat? They've gone… offshore themselves.
Someone is having a laugh here – and it's not the taxpayer.
The bookies claim 2% tax will endanger jobs. Everyone's in danger at the moment, so why should they get preferential treatment while paying so little back? Gambling has been around for millennia – it's not going to disappear overnight. Bookies shops are closing, certainly, but people haven't stopped gambling. Online betting, according to Horse Racing Ireland, accounts for one-third of wagers. A betting shop can't compete with the accessibility of a computer.
Fianna Fáil has shown disproportionate favouritism to gambling over the years. This was epitomised by the annual bash at the Galway Races. Here they toasted Ireland's new gambling fraternity – the Property Speculators. Our property bubble, the most reckless 'gamble' of them all, was inflated at a race course.
Last week on TV3, Ahern recalled the betting that took place at Galway. On Budget Day, Lenihan can put some distance between his party and that era of gambling.
Doubling the tax won't be enough. Last year it raised a paltry €36.5m from €3.8bn worth of taxable bets. Get your abacus out minister, we can do better than that. Make it 10% and bring in some real money.
If you think the bookies can't sustain this, then divide the tax between them and the punter. If someone can afford to potentially lose money on a bet, then they can pay 5% tax on it. That would add just 50c to every €10 punt.
If that's too much for either side to bear, then tax the winnings, rather than the stake, at 10%. Tax all online betting, too, and level the field for smaller bookies.
This is your chance to make gambling work for society, minister, and it comes with a 'sweetener'. Bertie had a go at you last week for bitching about him behind his back.
You can't get even by slapping tax on his autobiography, so why not slap one on those mysterious wagers he loves?
You won't get him on the book Brian, but you can definitely hit him at the bookies.

dkenny@tribune.ie

December 6, 2009