Mr. Brian Kavanagh:

There is room for further increases in betting tax. However, there is a need for some fundamental realignment on the basis of which it is charged. I am sure members have had plenty of engagement with the betting industry. The betting tax yield this year will be just under €100 million from a total turnover of over €5 billion. It is a relatively small figure. Only five years ago, that figure was €29 million, however. Deputy Michael Noonan, the then Minister, took a two-step process whereby he extended betting tax to offshore betting. Betting which takes place through the telephone or the Internet previously was escaping the tax net because it was routed through Gibraltar. Legislation was brought in 2015 to ensure it was captured. That increased the yield from €25 million to €50 million. Last year, the rate of betting tax was increased to 2% and the yield on the first eight months will be close to €100 million.

The issue with that is the tax is paid by the bookmaker which is a line in the bookmaker's profit and loss account. This was a change introduced when Brian Cowen was Minister for Finance in 2006. The bookmakers were lobbying at the time that the punters should not pay the tax. Some of the bigger bookmakers told the punter they would absorb the tax, meaning smaller bookmakers could not compete with that. As a result, the system was changed at the time where the tax was taken down from 2% to 1% but it was deemed the bookmaker should pay it rather than the punter.

We believe that is wrong. If one looks at any other form of VAT are any other form of consumption tax, it is paid by the customer rather than the operator. It led to a tax-free betting bonanza, possibly even fuelling excessive gambling and issues like that.

The tax yield is low relative to the level of betting activity that is going on. We believe it could be increased. If it were to be increased, the liability, some element or all of it, would have to switch back to the punter rather than the bookmaker. It is at a point in the bookmaker's profit and loss account where they cannot afford to pay any more. We do not believe if a punter has to pay 1% or 2% tax on betting, even if comes out of winnings as opposed to turnover, it would be an onerous burden. We believe the State is not getting the yield out of its betting that it should do.