IBA report: betting tax rise could end up costing Irish government money

The Irish exchequer could actually lose money if the government proceeds with its planned doubling of betting tax, according to a report commissioned by the Irish Bookmakers Association.

The report, prepared by Anthony Foley, Emeritus Associate Professor of Economics at Dublin City University, suggests that job losses, the consequent loss of tax revenue, and a knock on effect to the services sector, could cancel out the money gained by increasing the betting tax.

The Irish government last month announced its intention to double betting tax from one to two per cent in the 2019 budget, prompting the IBA to warn 400 of the 850 betting shops in Ireland could close, with the loss of 2,400 jobs.

According to Foley's report the government's decision was taken "apparently without a detailed analysis of the economic consequences of the possible negative effects on the commercial viability and sustainability of bookmakers".

He contrasted that with the detailed analysis conducted by the Department of Finance when considering the implications of a VAT increase in the hospitality sector.

Foley said: "515 betting shops have closed since 2008. The doubling of betting tax puts another 400 shops under threat."

On the basis of detailed calculations outlined in his report, Foley concluded that the impact of those closures to the exchequer could be £35 million.

Estimating that the traditional bookmaking sector will be responsible for around €30m of the likely betting excise receipts in 2018, Foley therefore concluded that exchequer losses would exceed the gain from the tax increase.

Sharon Byrne, chairwoman of the IBA, said: "Even if our estimates for shop closures are incorrect, and unfortunately I don't think that's the case, Professor Foley's report shows this is far from being the cash cow that the government thinks it is.

Sharon Byrne: 'This is far from being the cash cow that the government thinks it is'

"Lots of operators have a net margin of less than one per cent. This plunges them into liquidation.

"The two per cent is too crude a tax and too blunt. Maybe it's time to look at an alternative tax in order to save the jobs of so many people as these are unnecessary job losses.

"The small bookmakers and independents will be wiped out if we don't."

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