In George Osborne’s budget speech he announced his intention to extend the horserace betting levy to offshore licensed bookmakers, to look at wider levy reform and at introducing a ‘racing right’ to support the sport.
On hearing this, the rather ecstatic Paul Bittar from the British Horseracing Authority said:
“Today’s announcement by the Chancellor represents a major milestone in our efforts to secure the future finances of our industry.
For too long we have sought a funding mechanism which reflects the nature of the modern Racing and Betting industries. Today’s commitment brings us considerably closer to achieving this goal, and securing the future prosperity of one of the country’s leading sports and a major employer across the country.
We look forward to engaging positively in both consultation processes, on levy extension to offshore operators and wider levy reform or replacement, in the coming months.”
We have been here before. The only new element is that the statement from the Chancellor underlines the government’s commitment to be rid of the levy, where, on occasion, the Minister is asked to become the arbiter when the two sides cannot agree. Something governments hated because you cannot please everyone and normally end up pleasing no one.
First of all, let us look at the tortuous process that has taken place from the government’s original decision to where we are today:
• November 2004: The European Court of Justice ruled that the BHB had no protectable rights in its database. The first attempt to abolish the levy failed.
Lord Donoughue recommended option (3)
The racing right would be a monopoly provider and although the current levy is imperfect it does have various checks and balances to prevent abuse from either side.
There is no property right payable for anyone to participate in racing so presumably primary legislation would be needed to create one. The Gambling Act allows conditions to be attached to licences that conform with the licensing objectives (crime, fairness, protection young). A racing right falls outside that scope.
The Government has said that a racing right would apply only to horse racing but to do so would cause other sports to complain and bring forward state aid objections. The levy came into being in 1963 and was amended in 1969 which predates the UK’s membership of the EU. It is therefore thought of as existing state aid and thus tolerated by the EU. That, however, does not make it legal and any tampering with the existing system could make it “new aid” and thus challengeable.
The main issue is the 20% VAT that would be chargeable under any commercial arrangement.
The levy is not perfect, far from it, but it does carry with it significant tax advantages that would be lost if it were abolished.
Roger Bootle, while discussing housing in The Telegraph, said last week “Politicians are constantly in search of purpose. That is why they meddle in so many things that should not concern them”.
On this issue they should let sleeping dogs lie.