Long a scapegoat whenever the Treasury needs quick cash, Labour will regret taxing the gambling industry, writes Oliver Dean
The gambling and gaming sector has come under a barrage of attacks this week, with more than 100 MPs signing a letter urging the Chancellor to raise duties on the industry. Yet, as is often the case with this government, an anti-business mindset is driving policy forward, and as a result businesses, employers and the economy will suffer as a result. As businesses have been saying for months, the Chancellor must take a pro-business approach to the upcoming budget, or risk even greater economic decline.
The betting and gaming industry has long been an easy political target. It can be painted as a convenient scapegoat whenever the Treasury needs quick cash. Yet those calling for higher taxes on the sector overlook some important realities. More than 20m people in the UK enjoy gaming each month, generating over £4bn annually for the Exchequer and supporting more than 100,000 jobs across the country. At a time when the government wants to position itself the most pro-business administration in modern history, throttling an industry that contributes so much to jobs, growth and investment would be a contradiction.
There is also a serious risk that higher taxes could push consumers into unsafe, unregulated markets. If the rate rises to 25 per cent, operators will have no choice but to pass on the costs to everyday people. When customers are faced with higher prices, they will turn to illegal providers instead – and we know this for a fact.
This problem is already significant, with 1.5m Britons gambling on the black market annually, costing the Treasury over £4bn a year. Across Europe, that market is worth nearly £70bn and growing rapidly. If the Chancellor goes forward with these proposed hikes, she will be pushing ordinary Britons into the arms of criminals.
The better path is not to penalise a sector that is already making a major contribution to Britain’s economy, but to work with it. A pro-business approach would involve creating a competitive tax environment, encouraging investment, and ensuring that regulated operators remain attractive to consumers. That way, the government can secure long-term, sustainable revenues, rather than throwing different sectors under the bus whenever they need to make a quick cash grab.
Taxing gambling isn’t the ace in the hole Labour thinks it is
No one is denying that Britain’s fiscal landscape is in tatters. Borrowing costs have soared in recent weeks and businesses are losing confidence in the government. Indeed, the Chancellor is poising herself for the upcoming Autumn Budget, but if she is not careful she will drive businesses out of the country.
Hiking taxes on the gaming industry is not the wildcard that Labour believes it to be. Short-term raids may sound good to idealistic MPs who only care about the headlines, but the knock-on effects borne by everyday people will be catastrophic. As the Betting and Gaming Council have highlighted, Labour’s plans are nothing more than a “quick fix” to a broader, systemic issue.
If the Chancellor really wants to fix the foundations of Britain’s economy and move the country towards economic growth, then she must change tact. That means working with, not against, the betting and gaming sector. The Treasury should be exploring ways to partner with the industry on innovation, investment and responsible play. A stable regulatory and tax framework would give businesses the confidence to invest further in the UK, bringing new jobs, technology and investment. It would also ensure that players stay within the regulated market, protecting consumers while keeping money flowing into the public purse.
The ace up the government’s sleeve isn’t punitive and punishing tax hikes. It is a partnership. Until both the Chancellor and Labour MPs realise this, then the economy is only going to get worse. She must change course for the good of the country.
Oliver Dean is a political commentator with Young Voices UK. He studies History and Politics at the London School of Economics and Political Science (LSE) where he is the President of the LSE Hayek Society.