Sky Bet is relocating to Malta where it can enjoy an effective corporation tax rate of around 5 per cent rather than the 25 per cent it is currently paying in Leeds. The move comes after months of lobbying for higher gambling taxes and credible rumours that Rachel Reeves will increase remote gambling duty in next week’s Budget. Gambling operators cannot avoid paying duty on the Gross Gambling Yield generated by customers in the UK (which is essentially revenue, not profit), but they don’t have to be headquartered in the UK.
Since most gambling companies are based offshore and the government has done nothing to dampen talk of remote gambling duty going up from 19 per cent to 25 per cent or more, it should have taken no one by surprise when Sky Bet decided to flee the country. And yet the Chair of the Treasury Select Committee, Meg Hillier MP, was completely blindsided. “I’m pretty astounded,” she told ITV News. “The betting industry appeared in front of the Treasury Select Committee just a couple of weeks ago, extolling the virtues about how much tax they’re paying in the UK. And here we see a company going and offshoring. It rather takes the biscuit doesn’t it?”
The Betting and Gaming Council (BGC) did indeed appear before her committee last month, as I reported at the time, but it takes a tin ear to think that they were merely boasting when they explained that their members pay an effective tax rate of between 65 per cent and 80 per cent. They explicitly said: “The BGC’s role is to highlight to the Committee and the Treasury the negative impacts of any additional tax rises on the whole of the betting and gaming industry and the jobs it supports.” Mrs Hillier apparently misheard this as: “We pay lots of tax and would be delighted to pay some more.” Failing to take the hint, the Committee published a report shortly afterwards calling for much higher gambling taxes and urged the government “not to cave in to industry scaremongering”. It is difficult to say how high they think the rate of remote gaming duty should be because they don’t always grasp the difference between profit and revenue, and they don’t seem to know how much other parts of the sector are taxed but, if taken literally, their report implies an industry-crushing tax rate of at least 51 per cent on online revenues.
Another MP who struggles to understand the tax system is the Liberal Democrat leader and Alton Towers season ticket holder, Ed Davey, who was similarly shocked by Sky Bet’s departure yesterday. Rising to his feet for Prime Minister’s Questions, Davey cited the baseless factoid that “every year there are more than 300 suicides related to problem gambling” and asked if Keir Starmer agreed with him that “it is time we taxed them on their UK profits so these online gambling firm don’t escape wherever they are registered for tax”. It seems that neither Davey nor the MPs who gave him a big cheer are aware that we have been doing this since 2015, and that it is not just their profits we tax but their revenue.
Spite is not going to put the public finances on a sound footing
The Budget hasn’t even been delivered yet, but the discourse has already pivoted from “they won’t leave, it’s scaremongering” to “they’re leaving and it’s not fair”. We see the same pattern of denial and condemnation when “non doms” migrate to Italy and the USA to prevent the UK government snaffling a hefty chunk of their global income. Like gambling companies, they are portrayed as parasites by the left when they are in Britain and then described as unpatriotic when the policies of the left force them to leave.
“Good riddance” is a common sentiment when gambling firms and wealthy entrepreneurs leave Britain, but it is not a good basis for economic policy. Spite is not going to put the public finances on a sound footing. When it was put to the ubiquitous Zack Polanski that a wealth tax would produce far less revenue than he has claimed, he admitted that “this isn’t about creating public investment” but is “ultimately about tackling the deep inequality in our society”. Turning the richest people in Britain into tax exiles would certainly reduce inequality — income inequality was relatively low in the 1970s under such a system — but you would have to be morbidly obsessed with egalitarianism to view this as a desirable end in itself.
The anti-gambling campaigner, former Corbyn advisor and Polanksi admirer Matt Zarb-Cousin responded to Sky Bet’s departure by advising the government to “offset this loss of corporation tax by hiking remote gaming duty to 50 per cent”, a rate that would not only lead to the whole sector operating offshore but would make their UK websites unviable. “Good riddance”, some will say. Zarb-Cousin makes no secret of the fact that he wants to tax online casinos to be “into oblivion”. If you are on a moral crusade to get rid of the rich and drive gambling companies out of Britain, taxation is a good way to go about it, but let’s not pretend that this is about raising revenue.
