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SELECT COMMITTEE ON AGRICULTURE, FOOD AND THE MARINE debate -
Thursday, 24 Jun 1999

Vol. 2 No. 3

Horse and Greyhound Racing (Betting Charges and Levies) Bill, 1999: Committee Stage.

Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."

I asked on Second Stage why this section had to be inserted and why it had not been deemed necessary to insert it in the 1994 Act. It reads: "The Authority shall have all such powers as are necessary for or incidental to the performance of its functions under this Act." Is it necessary to insert this section to validate actions of the IHA under the 1994 Act? It is my strong view that powers granted to an authority should always be specific and unambiguous and provided in legislation. They should not be so wide-ranging as to be deemed plenipotentiary. The meaning of "all such powers as are necessary" should be defined clearly. The section appears to be out of place. Why is it being inserted now?

This is a technical insertion of a legal nature into the Irish Horseracing Industry Act, 1994. I am advised that the failure to insert it was an oversight. This is the standard provision in all Bills. It relates to the general functions of the IHA under the 1994 Act. No new powers are being given.

Question put and agreed to.
SECTION 3.

We now proceed to amendment No. 1. Amendments Nos. 4, 19, 35, 37, 41, 42 and 43 are related and they may be discussed together.

I move amendment No. 1:

In page 3, line 22, before "Section 54(1) (b)(i)” to insert the following:

"(1) Section 54(1) of the Act of 1994 is hereby amended by the substitution for paragraph (a) of the following paragraph:

'(a) An authorised bookmaker who enters into a bet at an authorised rececourse, on an event taking place there or elsewhere, other than by means of telecommunications from outside the racecourse, shall pay to the Authority a levy on such bet.’.”.

These are largely technical amendments which clarify the original intention that on-course levies and charges will be payable on bets entered into at racecourses with the exception of bets which are phoned in from outside the racecourse. Telephone bets will continue to be subject to excise duty payable on off-course bets. This is necessary to protect Exchequer revenue on such bets.

Amendments Nos. 4 and 37 make it clear that the rules applying to the excise duty clarified by section 75 of the Finance Act, 1996, will also apply to turnover charges on telephone bets at racecourses and greyhound tracks. This clarification means that the words being deleted under amendment No. 19 are not required.

The levies and charges payable to the IHA are those due on bets placed by people attending race meetings. The 5 per cent rate was removed to encourage people to attend race meetings. Those who attend the Galway festival in a few weeks time, for example, will not have to pay tax on any bets placed. Technically, a person who rings an on-course bookie could have avoided paying the 5 per cent rate. We want to encourage such people to attend race meetings where no tax is payable on bets placed while people who phone in bets will be charged the same as in the high street betting shop, which is 5 per cent. The 10 per cent levy is being reduced to 5 per cent, and the 5 per cent on-course tax is being abolished with a view to encouraging people to go to race meetings. The levies and charges payable to the IHA are those due on bets placed by people attending the race meetings. This is only reasonable.

These amendments also serve to delete the word "course" from the term "course bet" as the full term "course bet" is defined differently in the Greyhound Industry Act, 1958, and the Irish Horseracing Industry Act, 1994. The 1958 Act limits the meaning to include only bets on greyhound races taking place at the track at which the bet is placed. To use it here in this Bill would, therefore, be incorrect as the levies and turnover charges apply to on and off-course bets placed at racecourses or greyhound tracks. This would also lead to some confusion. The bets intended to be the subject of charges and levies referred to here are adequately and clearly defined in each context.

I do not oppose that proposal if it means there is an incentive for punters to go to race meetings. Everybody would support that. Obviously it is important to have good gates in both industries. That will come up again in later amendments. In the context of the potential of both industries we are as yet only scratching the surface. Without the benefit of the indepth knowledge the Minister has, I see nothing wrong with that amendment. Nobody in the industry has told me otherwise.

Amendment agreed to.

Amendments Nos. 2 and 5 are related and amendments Nos. 6, 9, 21 and 38 form an alternative composite proposal. All the amendments may be discussed together.

I move amendment No. 2:

In page 3, line 24, to delete "or such other percentage of not more than 5 per cent.".

Like everybody else, I was happy to see the on-course betting levy reduced to zero. However, section 3 reads: "Section 54(1) (b)(i) of the Act of 1994 is hereby amended by the substitution for “5 per cent. or such other percentage” of “, zero per cent. or such other percentage of not more than 5 per cent.”.” What worries me is that the variation from 0.3 to 5 per cent in the on-course betting levy provided for in section 3 is so wide. There is a 1,665 per cent differential. I do not think this is consistent with the announcement by the Minister for Finance in the budget. The public perception was that the on-course betting levy was being abolished. I have a feeling the Minister for Finance made the decision and did not realise that there would be a significant amount of money removed from the IHA in one fell swoop. What is being proposed now are alternative levies. They are obviously an attempt to fill the financial void that was created.

Section 3 should confirm the rates fairly explicitly. One of the Minister's amendments has gone a significant way towards meeting some of the points made and I acknowledge that. However, when the variation allowed is so great it is likely that the higher levy will be imposed and will become the norm. I am concerned about that. I await the Minister's comments. Nobody brought this to my attention and I am not speaking on behalf of any group, but as somebody who attends race meetings I believe the variation is too wide and that in a crisis this is where deficiencies in money would be made up. That is why I am concerned.

I appreciate that there was fairly widespread consultation before the Bill was published. However, I am very concerned at the latitude being given to the Minister. It is far too great. We are talking about from 0.3 per cent up to a maximum of 5 per cent, which is not in keeping with the spirit of the Bill. I would ask the Minister to seriously reconsider this.

We are fortunate to have a Minister for Finance, a Minister for Agriculture and Food and a number of Opposition Front Bench spokespersons who are very much in touch with the racing industry and know what is required. However, that may not always be the case. It would be a mistake to leave this proposal in its present form. I ask the Minister to seriously consider a substantial reduction in the rate.

I share those views. However, I have to confess that I do not know how one could put a ceiling on it. I have tabled an amendment on the next section which is related to this. I mean no disrespect to the Minister because everybody knows of his interest in the racing industry, but this is an important industry that is growing rapidly. From the point of view of a variety of people - farmers, punters, tourists and so on - last week's debate, which unfortunately I missed, was very important and there were many contributions to it, but for an industry that is so important we do not speak enough about it in the national Parliament. It is a huge money earner. A decision to increase the 0.3 per cent levy should be debated in both Houses of the Oireachtas. That would overcome Deputies' qualms that in years to come there might be people at the helm who do not have the same interest in the industry. It is only fair that it should be discussed here, and if the Authority can make a good case for increasing the levy, so be it - the facts of life dictate that the levy will not be reduced anyway.

There is a major principle involved here, as Deputy Penrose rightly pointed out. There is a huge variation between the charge of 0.3 per cent on turnover and a possible 5 per cent. If I were in the business, I would have to take it that somebody somewhere will have it in the back of their minds that there will be an occasion when the 5 per cent will be sought. When that happens a whole lot of things will kick into gear. I have no intention of delaying the meeting, but this is very important.

If the levy on turnover is increased by even 2 or 3 per cent, it is the punters who will bear the cost. That is what the Minister was trying to prevent at the beginning so that people would get involved in the business and it would be good for everyone. Ministerial consent is the norm in many of those cases. Because the variation is so wide it is reasonable to ask, particularly in view of the amendment which is coming up, in the event that the authority proposes an increase in the 0.3 per cent on turnover, that it would have to come back to both Houses of the Oireachtas. If the case is sufficiently good, the people who will be here at that time will have no trouble with it. If not, they should not agree to it. In any event it raises the profile to have it brought before both Houses of the Oireachtas. Given that the variation is so wide, as Deputy Penrose said, the maximum rate should be much lower than 5 per cent. In other words there should be no possibility of it ever being 5 per cent because, if so, it would defeat the purpose for which it was intended.

I welcome the Minister's announcement regarding the changes in on-course and off-course betting taxes. I am concerned about the variation of between 0.3 per cent and 5 per cent. If it was 5 per cent it would defeat the purpose. Given that the Minister mentioned Galway, Galway racecourse is involved in development plans costing in the region of £6 million to £7 million. I am sure much development work is taking place on greyhound tracks also. On the question of money to be paid by racecourse management teams or greyhound track teams, how is this going to be organised? Will it be paid by way of a levy, so much per racecourse trace or greyhound track, or will there be a global figure? I am concerned, given the development plans and levies on racecourses or greyhound tracks, that attendance fees will have to be increased. It would be a pity if they were increased significantly. Both horse racing and greyhound racing are very popular and we try to develop them further. Present developments in the industry are healthy. However, I would be concerned at the prospect of further increases in levies and taxes as it could put this activity out of the reach of people who would normally enjoy a day at greyhound racing or horse racing Will the management of greyhound tracks and horse racing courses be liable to a different type of tax or levy?

I am proposing amendments Nos. 6, 21 and 38 and oppose amendments Nos. 2, 5, 8 and 20. Deputies have made fair points both on Second Stage and here today. Since the Second Stage debate I have had an opportunity to look at this matter. In his amendment, the Deputy is proposing to remove from the State bodies, in conjunction with the relevant Ministers, the power to reintroduce the on-course levies and to increase the 0.3 per cent turnover charge in the future. I assure Deputies that provided the charge to generate the level of revenue is estimated, there is no intention to reintroduce levies or to increase the turnover charge in the short to medium term. These rates of charge were negotiated with the bookmakers and there was a wide degree of consultation. I expect that any change in the future will be subject to similar consultations with the industry. However, it would be foolish in the extreme not to build into the legislation now the flexibility for adjustments in the longer term. In relation to the zero rating of the levy, I am happy to leave the provisions allowing the State bodies to reintroduce that levy subject to the consent of the Minister, which was always the safeguard provided in these matters in the past.

In light of the strong case made on Second Stage and again today I appreciate the concerns expressed regarding the wide variation allowed for in the Bill between the proposed turnover charge of 0.3 per cent and the ceiling of 5 per cent. The case was made that that is several multiples of 1,600 per cent. Having given this matter further consideration, I am proposing in amendments Nos. 6, 21 and 38 to reduce the ceiling from 5 per cent to 2.5 per cent in respect of the off-course turnover charge on the horse racing and greyhound racing on-course turnover charge. I am opposing amendments Nos. 2, 5, 8 and 20.

Will the Minister's amendment satisfy——

It is the "half a loaf is better than no bread" syndrome. It is a move in the right direction and the Minister has recognised the point we made.

Amendment, by leave, withdrawn.
Section 3, as amended, agreed to.
SECTION 4.

Amendment No. 3 is in the name of the Minister. Amendments Nos. 9, 14 to 18, inclusive, 23, 28, 29 and 40 are consequential. All the amendments may be taken together by agreement. Is that agreed? Agreed.

I move amendment No. 3:

In page 3, line 26, to delete "55" and substitute "54".

There are two major points here. I thank the Minister for reducing the ceiling. It is important that the case for any change in the levies in horse racing or greyhound racing should be brought before both Houses of the Oireachtas for the reasons given earlier. Section 4 provides for a £2,000 levy to be imposed on bookmakers. The problem is that if one were to impose a blanket cover of a contribution from every betting shop in the country it would be most unfair and unjust on those with small shops. For many of those in small towns and villages who have certain overheads it would be an overkill if they had to pay the same per shop as those in larger population centres. I hope the Minister will have a different set of regulations for those people when the authority decides to increase the levy.

I have been sceptical for a long time about the necessity to increase the levy. The signs are good that buoyancy will be created by the industry in the future. This industry will go from strength to strength and we should not allow anyone in authority to say that the easiest way of raising finance, for whatever purpose, is to increase the turnover tax. If this matter has to come back to the Dáil and the Seanad, so be it. That will be the appropriate place to discuss such an important issue.

I made the point on Second Stage that I was seriously concerned about the blanket charge being placed on bookmakers. I accept the Minister has taken some action to deal with this. While I appreciate that his intentions are good, in practice that will have little or no benefit. I do not have the figures before me but section 4 states that a proprietor who has received turnover in that period - the period being one year - of £50,000 or more but less than £100,000, a charge of £1,000 will be paid instead of £2,000. If one of the larger bookmaking firms wanted to purchase a shop and that shop did not make more than £10,000 per week, they would not be interested in purchasing it. Most shops nowadays turn over £500,000 per year. There can be only two reasons a bookmaker is turning over less than £100,000 per year in a shop and is able to keep that shop open. With the costs involved in operating a betting shop it is not a viable proposition. I ask the Minister to reconsider those figures. The intention is good but in reality it will not have the effect the Minister intends.

I tabled amendment No. 26 on this issue to ensure it would be discussed. I accept the Minister's amendments are better framed than my own. Deputy Power has more experience than I have, but I know some rural bookmakers pay the licence but do not maintain a daily presence in rural areas. Those people will now be subject to this charge. I accept the variation is not as wide as the previous levy - it increased from £2,000 to a maximum of £5,000 - but bookies in small rural towns will be adversely affected by the charge. The annual charge is only loose change to the big boys but I am concerned about the small bookmaker in rural towns and villages who may open only for the major meetings. Those people provide a service to old age pensioners who might make the odd bet at the weekend and who may not have a means of commuting to the larger towns where the bookies are located. Deputy Power obviously spoke from experience. If one has a turnover of £1,000 it would hardly pay for the lighting etc. We would be concerned about that aspect.

The Minister has made some move to recognise the different status of income that might be earned by bookmakers and, depending on their location, that is probably what he has in mind. In light of what Deputy Power said, perhaps the Minister will examine the matter again on Report Stage. I acknowledge the Minister has moved in the right direction from the original intention of section 4, which was of great concern. There seems to have been some consultation between the Minister and the Minister for Finance to the effect that this levy would not vary, but it will vary. There would have to be a valid reason for it to increase from £500 to £1,000 and from £1,000 to £2,000, and up to the maximum of £5,000. That is important.

I have sympathy for the view expressed by Deputy Connaughton on his amendment because it is a matter of concern. Allowing for carte blanche gives an avenue to people to increase the charge without having recourse to anybody. They will determine whether the charge should be increased. They can talk to the Minister who may be sympathetic because he will know they are in a tight bind. The economy may be on a downturn and these people need money. That is the reason it might be appropriate that the regulation, which would give the power to increase such a charge, should come before both Houses of the Oireachtas for discussion. I see the sense in what Deputy Connaughton is proposing and would be sympathetic towards it. Perhaps the Minister might re-examine it on Report Stage.

On the Minister's amendment, I am not an expert on this but a number of people have spoken to me and I understand that the original licence fee for bookmakers was only £200. Under the legislation first proposed, and before the Minister's amendment, the £200 was increased to £2,000. Obviously that was a severe imposition on small bookmakers. Under theMinister's proposal that will increase from £200 to £500 for bookmakers making a low turnover. I am at a disadvantage in that I do not know where the break-off point should be but if it is as low as what Deputy Power said, is there any possibility of the Minister increasing the ceiling so that the bookmaker shop with a relatively low turn over would only have to pay £500? That would be a realistic figure. I imagine the Minister knows much more about this matter and I suggest he give it serious consideration. Obviously the Minister has done the figures on this. I assume he has a record of the turnover of various shops in main streets etc., but to make it more satisfactory his figures should be increased in light of what we are hearing. At the very least, the imposition from £200 to £500 at a certain level should be considered. The small bookmakers will probably accept that. On the question of debating the other issue in the Oireachtas, that is fundamental at this stage.

I will oppose amendments Nos. 7, 25, 36 and 39. The amendments proposed by Deputy Connaughton would mean that changes to the levies, turnover and flat rate charges would require the consent of the Houses of the Oireachtas. This would be unnecessarily restrictive given that ever since levies were introduced for the horse and greyhound industries in the 1940s and 1950s the State bodies were given authority to alter the rates subject to ministerial consent. Since the 1940s, this position was never abused because there was always a bit of a grá for both of those industries. These charges were reduced rather than increased whenever the opportunity arose. Such changes in rates are required to be completed by regulation which, under section 7 of the Irish Horseracing Act, 1994, and section 5 of the Greyhound Industry Act, 1958, are required to be laid before each House of the Oireachtas. Either House of the Oireachtas can annul a regulation within 21 days. That is sufficient control on the State bodies and the Ministers concerned. I oppose amendments Nos. 7, 25, 36 and 39 on the grounds I outlined.

I propose we adjourn until the Order of Business is finished because if it is anything like that of yesterday we will be over and back every 30 seconds. In the meantime we will conclude amendment No. 3 in the name of the Minister?

Amendment agreed to.

I propose we adjourn until the Order of Business is finished. Is that agreed? Agreed.

The Select Committee adjourned at 10.45 a.m. and resumed at 11.10 a.m.
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