Budget brings mixed fortunes for bingo operators
Posted by Epiphany Solutions on 27 Apr 2009 at 14:04
Some gaming operators received good and bad news thanks the budget, with VAT on bingo ditched, but tax on profits increased.
Bingo firms have been calling for a change to duty rules as the format was the only one in the gambling industry which had to pay 15 per cent VAT on top of a 15 per cent gross profits tax rate.
Some had branded this a form of double taxation on bingo and called for sweeping changes.
Chancellor Alistair Darling said VAT on bingo would be scrapped, which would cost the government £50 million. But he also said the gross profits tax rate would go up to 22 per cent for the game.
According to the Financial Times, the benefits to bingo companies from the VAT move could be minimal or non-existent because of the chancellor's decision to up the tax on gaming machines by nine per cent, which could cost the gambling industry an extra £20 million.
England has seen a rash of bingo hall closures in the last few years, with many commentators putting the phenomenon down to a combination of the smoking ban, new rules, and the recession.
The Financial Times added that as casino card room duty is going up, the budget means the treasury could get an extra £10 million from gambling this year, although figures show in 2010 it will be neutral, and by 2011 to 2012 the changes could add up to a net loss of £5 million.
Elsewhere, pub and drinks companies also face a hit to their pockets after alcohol duty was put up by two per cent. Tobacco taxes are also going up by two per cent, and along with petrol duty, the treasury expects these measures to raise £6 billion by 2012.
Pub industry representatives reacted angrily to the changes. The British Beer and Pub Association said the rises mean thousands of pubs and jobs could go.
The Financial Times also reported the Tobacco Manufacturers Association pointed out that duty rises would not cut smuggling or the number of people buying cigarettes abroad, which loses the treasury a considerable amount of money each year.
Among some good news for gambling groups was the fact the tax set-up for the gaming sector has been simplified.
But the Bingo Association said: "We have lobbied long and hard about inequality for bingo, but the chancellor has given with one hand and taken away with the other."
Association officials also said the changes could hurt smaller operators but not affect bigger companies as badly.
Among those listing their dissatisfaction with the changes was Gala Coral, which runs gaming machines across a network of casinos, bingo halls, and betting shops. The firm said it was not happy with a nine per cent increase in gaming duty and the increase in bingo tax.
There was no increase in duty for bookmakers, and the Times quoted Warwick Bartlett, of global betting and gaming consultants, as saying: "Any further tax increase would have tipped the balance towards a deduction from the punters' payout and the customer would simply have sought the offshore alternative, which would have led to job losses and lower tax revenues."
