In January of this year he Minister for Agriculture, Food and the Marine, Simon Coveney, TD, launched a stakeholders’ consultation process as part of a review his department commissioned into certain aspects of the Irish Horse Racing Industry.
As part of that consultation process, the Federation of Irish Sport made a written submission which was provided to Indecon – the successful tenderer to carry out the review – for consideration and assessment.
The Federation’s submission focused on the funding of the Horse Racing Industry with a particular focus on revenue generated via the betting turnover tax and its subsequent distribution. The Federation is of the view that in the interests of equity and fairness the proceeds of government revenue generated through taxation on gambling should be used to provide vital investment to the rest of Ireland’s sporting community in addition to continued support of Horse Racing.
The Indecon Report on the future of the Horse Racing Industry was published by the Department of Agriculture, Food and the Marine on Tuesday and Minister Coveney has indicated that some recommendations in the report may be acted upon as soon as September.
Below is a summary of what was contained in Indecon’s report relevant to the points raised in the Federation’s submission:
Section 3 of the report deals with the industry’s funding arrangements.
Executive summary of section 3:
Significant funding challenges must be surmounted to ensure the horse racing industry realises its potential. There are however concerns over the appropriateness and medium term sustainability of funding for the industry unless changes are made.
Our analysis indicates that the main potential source of additional funding is from the betting industry.
There is also a need to focus on maximising sponsorship and commercial income.In reviewing funding arrangements for this sector, Indecon believes it is important to also consider Ireland’s competitive position vis-à-vis:
- the ease of mobility of betting operators,
- the price elasticity of demand for betting, and
- betting tax compliance as it concerns remote betting operators.
In addition we believe it is necessary to consider staging of any changes in taxation.
Other funding issues include:
- the appropriateness of the racehorse industry’s requirements being exactly aligned with betting duty revenues.
Indecon’s assessment indicates that, in terms of funding, it is important that sufficient funding is provided to ensure reasonable prize money and to enhance the reputation of the Irish horse racing sector. Resources are also needed to finance racing integrity services, which are essential to the maintenance of the credibility and reputation of the sector. The development of racecourses and maintaining the disease free status of Irish bloodstock also require appropriate funding. In addition, effective international marketing is an important component in realising the economic potential of this unique sector.
The dependence on very scarce exchequer resources to the extent which currently exists represents a major strategic vulnerability for the sector given the current state of the public finances. Indecon therefore believes new sources of funding are urgently required to support the industry and to reduce the industry’s dependence on exchequer funding.
Indecon strongly supports additional and sustainable funding for the development of the sector but this must be accompanied by an equal priority to maximise efficiency, effectiveness and value for money.
Report recommendations on funding of the sector:
1. Measures should be introduced to secure a significant increase in taxation from the
Betting Sector.
2. A multi-annual commitment of funds should be considered to support the development of
the sector.
3. Greater funding certainty should be introduced to support medium term planning for the
integrity services in Irish racing.
4. As betting revenues increase there should be potential to significantly reduce general
Exchequer expenditure other than funds raised from betting taxation.
5. The merits of replacing the Horse and Greyhound Racing Fund should be considered.**
6. All betting operators should be required to obtain a Licence.
7. Taxation should be levied on the same basis on Betting Exchanges and on Remote as well
as on Traditional Bookmakers.
8. Licence Fees for All Offshore and other Bookmakers should be increased.
9. Taxation on betting should be on a place of consumption basis.
10. Rate of betting duty should initially be set at 1%.
11. Rate of Duty should be reviewed after one year.
12. Duty on betting intermediaries should be divided between layers and backers.
13. Effective compliance measures should be introduced based on a careful definition of what
is a betting “event”
**Indecon state that they do not believe specific taxes should be ring-fenced for specific functions and that there is merit in treating this as general tax revenue and making expenditure decisions on standard criteria.
The text of the Betting Amendment Bill was also published within the last two weeks. The amended Bill will extend the existing 1% turnover tax on bookmaker’s activities to remote bookmakers and also introduce a 15% commission tax on betting exchanges.
Links:
Federation of Irish Sport Submission
Press Release from the Dept of Agriculture
Irish Examiner – Taxpayers’ €29m grant to horse racing sector deemed unsustainable
Irish Examiner – Coveney defends €29m-per-year horse-racing spend
Irish Times – Coveney welcomes horse racing review
Irish Times – Going gets tough