I am very pleased with the lively debate we had in the Dáil on Second, Committee and Report Stages on this Bill. Three fairly significant changes were made to the original proposals in the Bill on Committee and Report Stages in the Dáil. These related to the extent to which the State bodies in question and the Ministers for Agriculture and Food and Finance would be allowed to alter the new turnover charges and the introduction of a three tier scale of rates on the flat-rate charges on off-course betting shops. Also the maximum rate for any foal levy to be introduced under section 5 of the Bill was increased. There is now a large measure of consensus on the provisions of the Bill as passed by the Dáil and presented here today. I now set out the background to these developments.
Last year strong representations were made by bookmakers that the competitiveness of their business was being seriously threatened by the recent growth and open promotion in the media of offshore tax-free telephone betting services. In order to counteract the effect of these developments on our heretofore buoyant betting market and to best protect the Exchequer revenue from this source in the long term, the Minister for Finance has, through the 1999 Finance Act, reduced the rate of excise tax to be applied to off-course betting from 10 to 5 per cent with effect from today, 1 July 1999.
The reduction in the off-course betting tax has implications for the on-course betting levy of 5 per cent which the Irish Horseracing Authority, the IHA, and Bord na gCon collect on bookmaker betting at the racecourses and greyhound tracks. Both bodies have in recent years, with the help of substantial Exchequer funding, invested in improved facilities to attract new patrons. One encouragement given to punters to attend race meetings to place their bets is the lower rate of tax or levy applied. In order to retain the differential and ensure the increased attendances of recent years are maintained and improved upon, it would be necessary to reduce or preferably eliminate the 5 per cent on-course betting levy. The elimination of the levy would involve the loss of revenue of the order of £6 million annually to the IHA and Bord na gCon. It was decided to proceed to eliminate the 5 per cent on-course betting levy provided satisfactory alternative arrangements could be made to replace the loss in revenue. This replacement income would need to be divided between the IHA and Bord na gCon on a roughly four to one basis.
On the basis of consultations which took place with industry interests and conclusions reached within the Departments, my colleague, Deputy Charlie McCreevy, the Minister for Finance and I jointly agreed and announced the following new measures.
In relation to on-course bookmakers, there will be a betting turnover charge at the rate of 0.3 per cent to be paid by all bookmakers operating at horse and greyhound race meetings to yield annual revenue of the order of £0.27 million and to be collected by the IHA and Bord na gCon respectively and also charges to be set by the IHA on bookmakers – and/or bookmakers pitches – or betting shops at horseracing fixtures, to yield of the order of £0.37 million and to be collected by the IHA.
In relation to off-course bookmakers, there will be a betting turnover charge at the rate of 0.3 per cent to be paid by all high street bookmakers to yield annual revenue of the order of £1.7 million, and an additional flat-rate charge of between £500 and £2,000 to be levied on all high street betting shops to yield annual revenue of the order of £1.6 million.
Both of these charges will be collected on behalf of the IHA and Bord na gCon by the Revenue Commissioners and paid over at regular intervals to the IHA who will then forward 20 per cent of these moneys received to Bord na gCon.
The annual grants-in-aid to the IHA and Bord na gCon will be increased by a sum equivalent to 0.3 per cent of the off-course betting turnover and divided between the two bodies giving, at current levels of betting, an annual increase in the grant-in-aid to the IHA of roughly £1.2 million and to Bord na gCon of about £0.5 million.
The IHA and Bord na gCon will be asked to reach an agreement with the racecourses and greyhound tracks on a contribution from them which will yield in the region of £0.5 million.
The reduction of the on-course betting levy to 0 per cent and the introduction of turnover and flat-rate charges on off-course and on-course bookmakers requires legislation and the relevant provisions amending the Irish Horseracing Industry Act, 1994, and Greyhound Industry Act, 1958, accordingly are included in this Bill.
The IHA and Bord na gCon are being given power to alter the new on-course betting turnover charge from time to time, subject to the consent of the Minister for Agriculture and Food, and to set and alter the on-course flat-rate bookmaker charges at their own discretion. The new off-course betting turnover and betting shop charges may be amended by the Minister for Agriculture and Food with the consent of the Minister for Finance. There are limits to the increases that will be allowed under the Bill which are 2.5 per cent maximum on the turnover charges and £1,000 to £5,000 depending on annual turnover on the flat-rate charges, although I would not envisage any substantive changes in the short or medium term. I emphasised that in the Dáil and I emphasise it again now.
The media have recently referred to a matter in relation to these changes. Senators may have noticed in the newspapers that there appears to be some controversy over when the provisions of this Bill will come into effect. On-course bookmakers say that while they agree excise duty on off-course bets on the high street is being cut from 10 to 5 per cent with effect from today, 1 July, the reduction in the IHA and Bord na gCon on-course levies is not taking place until later this month.
There is a perfectly reasonable explanation for this. The reduction of the excise duty was given effect in a simple section of the Finance Act which has already passed through this House. The provisions in the Bill needed extensive drafting and careful consideration by the Government and it is now being processed through the Houses of the Oireachtas. After it passes through the Seanad, it must be signed by the President and there is no way we can pre-empt the outcome of any legislation and introduce a change until the legislation has passed through both Houses of the Oireachtas and been signed by the President.
The processing of this Bill has been very expeditious and clearly the IHA cannot pre–judge a decision of the Oireachtas. I pay tribute to everyone concerned, particularly the staff of my Department and the draftsman's office who worked late into the night to process legislation very quickly. Processing legislation and drafting amendments is very time-consuming. When this Bill is enacted, I will sign the commencement order to bring its provisions into effect for the first date that is practicable and administratively possible.
Between now and the end of July there are not many major race meetings but at the end of July there is a major race meeting in the west, the Galway races. I intend to have this provision ready for the Galway races.