Thursday, 28 February 2019

Questions (12)

Oral answers (7 contributions) (Question to Finance)

I will allow Deputy Pearse Doherty to introduce Question No. 12, which is in the name of Deputy Maurice Quinlivan.

Maurice Quinlivan

Question:

12. Deputy Maurice Quinlivan asked the Minister for Finance if the review of the recent increase in betting duty and the examination of proposed alternatives will be accelerated in order to provide as much clarity as possible for the sector; and if he will make a statement on the matter. [9850/19]

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This question relates to the increase in betting duty. I welcome the postponement of the VAT increase on food supplements because it represents common sense. We discussed this at the committee. We also discussed the impact the betting duty is having on the sector. A number of independent bookmakers have already closed. Others are saying clearly and seriously that there is no way they can trade through the year unless they know a change is coming. They know that a review is taking place within the tax strategy papers. Can the Minister indicate to the House when that work will be completed? Can it be separated from the tax strategy papers to give the industry certainty, one way or the other, about what is coming down the line?

The increase in betting duty from 1% to 2% and the increase in the betting intermediary duty rate came into effect on 1 January 2019. The last time the duty rate was increased was 1975. At 1%, betting duty was at an all-time low. Receipts from betting duty represented less than 1% of all excise receipts in 2017. It is likely that this will also be the case in 2018.

In the course of last year's Finance Bill process, I acknowledged that small independent bookmakers may have difficulty competing with larger bookmakers with retail and-or online operations. At the time I agreed to review an alternative proposal put forward by the betting sector. My officials are considering this proposal, including the compatibility of a core element with EU rules, and will set out analysis and options in relation to betting duty at the tax strategy group meeting in July. The papers will be published shortly afterwards.

While work on the review is under way and there has been engagement with the industry, we must ensure that any potential change in either the model or the rate is fully compliant with EU regulations. This work is now happening.

If it were the case that clarification regarding the proposal from the industry cannot be provided until July, I would accept that, but that is not what I am hearing. I understand significant work has gone on within the Minister's Department in respect of it. We welcome the fact that this is under review. I understand there has been significant engagement with different parts of the sector regarding their proposal but the issue is that bookmakers and their banks are saying there is no way they can continue to incur those losses month after month. Bookmakers are telling their banks that a change may be coming but the banks are asking when they will know that. Knowing in July or August is a bit late for some of them. We also have a scenario whereby some of the larger operators are poaching some of the best staff within these sectors because there is a knowledge within this sector that there is an issue with many small independent retailers. People who have been trained by and are loyal to those retailers are worried about their own future, and that is normal. The sooner we can give certainty to this sector one way or another, and I hope it will not be that the Government will not change its position but that it will legislate for the industry proposal, the better.

As I said, much work has already taken place regarding this issue. I thank the Deputy for acknowledging that. It is my intention to meet some representatives of the sector to have a discussion with them on the issue. I will not give a commitment at this point on how I will handle the tax strategy group papers because if I begin to pare out one sector or one issue from the entire process, the entire process runs the risk of being undermined. I am aware of some of the consequences this move may cause. It is difficult for me to disentangle the effect of this move from some of the broader changes that are taking place in this sector, but my officials are examining this alternative proposal and are looking at whether it is compatible with EU law. I plan to be in a position in the coming weeks to meet representatives of the sector and look at where this work stands.

If I may pick up on a different matter raised about the planned change on the tax on health supplements, this is a decision that was made by the Revenue Commissioners to allow more consideration of the issue. However, I want to highlight that they have emphasised to me their very significant concerns regarding the operation of that law in that sector. They have raised serious matters with me that will be further considered. I want to indicate to those in the sector that serious work will need to take place on this matter with the Revenue Commissioners, and I will be playing my part in that.

We welcome that, and that will be dealt with in detail in respect of the tax strategy group papers. I asked the Minister in committee whether it would be helpful if the Revenue postponed its implementation. He might answer whether that would be helpful.

The key area is in respect of the bookmakers. I would argue that this is different from some of the other work under consideration in terms of the tax strategy group papers because it comes from proposals to carry out this review that have been put and accepted by Government in the debate on the Finance Bill. That is different. There was no need for it to be tied into the tax strategy group papers although, all things being equal, that is where it should be dealt with. The issue is that there is uncertainty. The Minister acknowledged in the debate on the Finance Bill that this would lead to job losses, however they can be quantified. There is no doubt that it will put additional pressure on a sector already under pressure and under restructuring. If clarification on state aid rules comes from Europe and if the Department is in a position to identify a recommendation to change the position on betting duty, will the Minister indicate that to the industry, if it is available to him, prior to the publication of the tax strategy group papers?

The Deputy is looking for certainty on behalf of businesses that want to be able to offer certainty to their employees or to those providing funding or lending to them. He is then asking a hypothetical question about what I might do. All I will commit to doing at this point is continuing work that is already under way. My officials and my Department have done a lot of work in this area. At an appropriate point, I will then meet those who are involved in the industry itself.