The purpose of this section is to increase the duty on betting.
SECTION 40.
Question proposed: "That section 40 stand part of the Bill."
There will be no change in the rate of tax. At the moment, off-course betting is subject to turnover tax at 5 per cent and excise duty of 10 per cent. Betting is not an activity which fits into the VAT system. We are increasing the excise duty to 15 per cent. The turnover tax will be abolished so that the effect on betting will be the same.
I must confess to being ignorant in relation to tax on betting.
I must confess, also, I am not an expert on it.
A person can opt to pay tax on his bet or tax can be deducted from his winnings, at the same rate. I do not understand this.
(Dublin Central): There is a gamble here. You pay your tax, irrespective of whether you win.
There should not be a gamble in relation to payment of tax.
I am not a betting man either, but I understand from some of my colleagues who are that the difference is if you wish to you can put on your bet and pay tax then. If you put on a bet of £5 and the tax is 50p you can pay it immediately and draw your winnings without having to pay tax. This means that, in fact, you are putting on a bet of £5.50.
Who takes the gamble in this case?
If a bet of £5 wins at ten to one, the person would have to pay tax on the total amount if he did not pay tax when placing the bet—he would have to pay 15 per cent of £50.
The betting duty and the turnover tax at present are charged on the amount wagered. That is the basis for both taxes. How the bookie manages to pass than on to the punter is a matter between them. If he says the punter will have to put down £1.20 for a £1 bet or deduct the tax from the winnings is a matter between them.
If tax is paid on the amount put down at the rate of 10 per cent on a £10 bet, why should the person putting down the bet be subject to tax on what he would win? According to the tax law he should only be liable for tax on the £10 he put down, but he is open to be taxed at the rate of 10 per cent on a £100 win. That appears to be inequitable. Why not say tax must be put down with a bet and make that a general rule?
Perhaps the moral is there is not enough competition among bookies?
(Dublin Central): Some people pay the tax with the bet and on other occasions the bookmaker will deduct it from the winnings. If tax is not paid on the bet and if the bet does not win the bookmaker must pay the tax. I suppose he tries to balance it out in that he takes a greater amount from the man who wins. In this way he might think he was striking a balance between them.
In effect that is what he does. He should do better by making the addition to the amount wagered. Every bookie hopes to pay out less than what he takes in. However, it is entirely a matter between him and the punters.
Is there a possibility that the bookie can make a profit on his tax collection?
He makes the punter who wins pay for the man who loses.
Is there a loophole which allows bookies to make a profit on the collection of taxes for the Revenue Commissioners?
There is the difference between what he takes in and what he pays out, plus the tax.
It is possible. However, I suggest all we are doing is to take betting out of the VAT system.
I never bet on dogs or horses and I have no connection with the business. However, I had considerable experience with it when the Racing Board Bill was being discussed. At the time the rate was 2½ per cent; this rate of 2½ per cent in 1945 has become 15 per cent. Captain Martin, who was regarded as the most upright bookmaker at that time, told us his profit on turnover was 2½ per cent. This rate of taxation has increased from 2½ per cent to 15 per cent. This is all part of the inflationary spiral. According to the newspapers the amount being wagered is increasing all the time and that should be good enough for the Exchequer. The rate of 15 per cent is very high. There is no doubt the bookmakers will so arrange matters to meet it, but it will take out of the ring that much extra money. That is accounted for by the extra money that is printed, but every time this kind of thing is done it is extremely bad for the financial state of the country. I am not talking about the Exchequer but about the finances of the economy. What case has been made for increasing this 15 per cent?
I am not sure whether Deputy O'Donovan took in what I said earlier. We are not proposing to increase the rate of tax at the moment. The tax is 15 per cent and this is made up of 10 per cent excise duty and 5 per cent turnover tax. What we propose to do here is to increase the excise duty to 15 per cent and to avoid turnover tax.
Even allowing for that it is obvious that the two taxes were grossly excessive.
That is another point.
As one who has had experience, in the capacity of a trade union official of visiting employers and attempting to extract wage increases from them for their employees, I always hear from them about how hard times are, but on any day of a race meeting these gentlemen in their thousands can be seen at such functions. My heart would not bleed if this section of the community had to pay a little more. The small punter who speculates a few shillings has an interest in racing in that way but I would have no sympathy for the big fellows.
But are they caught?
There are rumours.
Regardless of our opinion on these matters all we can be concerned with here is the switch over.
Section agreed to.
Section 41 agreed to.