Paddy Power Betfair chairman sets out opposition to tax hike
Extracts of a letter written by Paddy Power Betfair (PPB) chairman Gary McGann and sent to Ireland’s finance minister Paschal Donohoe have been published by the Sunday Times. In the letter, McGann urges Donohoe to reconsider the imminent raising of gambling tax in Ireland.
The letter, penned in October 2018 and released this weekend under the freedom of legislation act, claims the the tax hike symbolises the government’s interest not in local companies but “in foreign investment”.
To support this claim, McGann highlights the fact that Ireland has a “betting tax regime significantly higher than the international average”, but its corporate tax is low, at 12.5%, to attract foreign investment.
McGann claims that the tax rise, a doubling to 2%, would disproportionately affect Paddy Power Betfair, as Ireland’s biggest operator. The firm expects its annual tax bill to increase by £20m.
The tax hike was announced in October 2018 and saw shares in PPB drop £250m almost immediately.
Operators and stakeholders have not been shy in voicing their thoughts. Operators have warned from the outset that job losses and shop closures will certainly result, while also questioning the government’s view that revenues would increase. Government says that the revenue will be put towards responsible gambling initiatives, but opponents to the hike say all revenue would likely go straight to the exchequer.
The implementation of the new tax rate was delayed in November after industry pressure. Fine Gael, the ruling party, is currently reviewing its own impact assessments on jobs and retail outlets.
But the new rate looks here to stay. Earlier this year, Minister of state for equality and integration, David Stanton, said that the new Gambling Control Bill will finally be delivered this year. The Bill has seen delays since 2013, but the framework is now expected to finally be delivered this year, with implementation planned for the following year. The Bill also sets out a new independent regulatory body to be established.