Over half of Britons support increasing tax on online gambling

Ahead of the Autumn Budget, the Social Market Foundation is publishing a report that makes the case for increasing the tax on online gambling and casino gaming. This tax (Remote Gaming Duty) is currently set at 21%. The report calls for a doubling of the tax to 42% – a rate which could bring in as much as £900 million to the Exchequer.

There is public support for increased tax on this sector.

Online gambling: public in favour of tax increase

New polling commissioned for this report shows that over half of Britons (52%) believe the government should increase tax on online gambling. When asked to rank which taxes should be raised by the government, three-quarters of people said that gambling duty was their priority, above income tax, VAT, inheritance tax, and duties on fuel, alcohol, and tobacco.

Online gambling is linked to higher rates of harm. The recent Gambling Survey for Great Britain showed that online slots had a higher than average proportion of people with a Problem Gambling Severity Index (PGSI) score of 8 or more. This harm carries a fiscal cost which the Office for Health Improvement and Disparities has estimated at over £1 billion.

Remote gambling has seen substantial growth in recent years. Crucially, UK operators are willing to pay more tax in other countries on the same activity.

The Social Market Foundation says there is an opportunity for the new Labour Party government to raise revenue from online casino gambling, restructuring outdated tax structures and addressing the costs of harm created by the sector. There has been no major review of gambling tax for over a decade, despite previous governments pledging to carry one out.

Labour should act in the Autumn Budget

The report argues that online casino gaming is currently undertaxed by the UK. There are several reasons for this:

• Unlike most other goods and services in the UK, gambling does not attract VAT.
• Gambling can lead to harm, which the government has shown creates fiscal costs for society. Online gambling, such as slots, have a higher incidence of harm.
• Many remote gambling operators avoid taxes by basing parts of their operations offshore, meaning they do not pay UK corporation tax.
• British tax rates are often lower than those in other countries – in some European markets, tax on remote slots is closer to 40%, and in some US states it is over 50%.

The report is authored by Dr James Noyes, senior fellow at the SMF, who previously helped lead the Labour Party’s policy agenda on gambling reform, and Dr Aveek Bhattacharya, research director at the SMF and former advisor to the Gordon Brown Commission on the UK’s Future.

The Social Market Foundation is not alone in calling for a rise in online gambling taxes. The Institute for Public Policy Research (IPPR) recently published its landmark Commission on Health and Prosperity in the UK, which called for an increase in gambling duties which would raise an extra £2.9 billion by 2026.

Dr Aveek Bhattacharya, research director at Social Market Foundation, said:

For too long, online gambling operators have profited from lower tax rates in the UK than many of our peer countries. Doubling remote gaming duty to 42% would better reflect the social and economic harm they cause, and raise up to £900 million for the public purse.

Featured image via the Canary