Chancellor George Osborne delivered a big tax boost for the embattled UK bingo sector in his 2014 Budget.
He announced in his Budget speech of 19 March 2014 that the rate of bingo duty will be halved from 20% of gross profits to 10%, making bingo the lowest taxed land-based gambling activity in the UK. Bingo had been lobbying for a reduction to 15%, so the reduction to 10% must have been beyond what bingo operators dared dream.
Taxation has long been an issue vexing the bingo sector in the UK. Up until the UK government’s Budget of April 2009 bingo had attracted both Value Added Tax (VAT) and Gross Profits Tax (GPT). This was a situation unique to Bingo within the gambling sector.
The bingo sector lobbied hard to have this situation changed and in April 2009 the government acted but not quite in the way the industry had anticipated.
The then Chancellor announced that VAT would no longer be applicable to Bingo but the government also increased GPT from 15% to 22% – giving with one hand but taking more with the other!
Rank, owner of Mecca Bingo, believed the new taxes would cost it GB£9m per year. But in the subsequent Pre-Budget Report of December 2009 the government did lower the rate of Bingo duty from 22% to 20%. But bingo operators still argued that bingo should not be taxed at a higher rate than the 15% that betting attracts.
In the past, Paul Talboys, chief executive of the Bingo Association has commented: “The current taxation regime is a disaster – when you consider that an average club employs around 30 people and probably needs to re-invest around £1m in capex in order to modernise and stay competitive then £70,000 [profit] is not much at all. The ones [halls] in trouble tend to be smaller bingo clubs which are much more entrenched in the local community.”
In mid-February 2014 the Boost Bingo campaign handed in a petition to the Treasury with more than 300,000 signatures calling for a reduction in bingo tax.
Miles Baron, Chief Executive of The Bingo Association, argued, “Reducing bingo duty will enable clubs to invest in their future. More investment means more jobs and more thriving bingo communities. If bingo duty is lowered from 20% to 15%, the industry as a whole has committed to substantial investment in modernisation and jobs.”
Just over a year away from a General Election any governments would like the idea of “thriving communities” (where wavering voters live), “job creation” and “substantial investment”. There is also the possibility of extra tax revenue if bingo halts its revenue slide and can increase participation.
Global Betting and Gaming Consultant’s director Lorien Pilling commented: “In today’s announcement the Chancellor has listened to bingo’s pleas and actually gone much further than the sector asked with a tax reduction not just to 15% but to 10%. With the general economy continuing to improve, bingo now has no excuse not to deliver.”
Ian Burke, Rank Group chief executive, was upbeat after the Chancellor’s statement: “Today’s announcement is an important boost for Britain’s bingo clubs, which provide a range of social and economic benefits for the communities they serve. By bringing bingo duty into line with other forms of gaming entertainment, the Government has created a basis for renewed investment and innovation.”