4 days to the abolition of betting duty: Experts' views - `Prices or margins will be taxed, rather than quantity'.
Dr Leighton Vaughan Williams
The government's decision to move to GPT was heavily influenced by a report commissioned by Customs and Excise from Nottingham University Business School and Nottingham Trent University.
The report noted that, in terms of tax revenue, the GPT equivalent to betting duty at 6.75 per cent was more than 26 per cent. GPT at 15 per cent is equivalent to a turnover tax of less than 4 per cent, but Dr Leighton Vaughan Williams, one of the report's co-authors, stresses that the benefits of the switch are not merely because of a tax cut.
He says: "What GPT involves, and I am not sure this has been fully appreciated, is a switch from a tax on turnover-on the quantity of betting-to a tax on prices or margins. We don't want to tax quantity, we want to encourage it.
"Critically, the effect of GPT is to give bookmakers an incentive to pursue a low-price, low-margin, high-turnover strategy."
A report by the investment and financial services group in January suggested that "UK gambling is poised to enter a golden era of long-term structural growth."
Merrill Lynch predicted that with GPT at 15 per cent, the Hilton Group's pre-tax profits, about a third of which come from Ladbrokes, would rise by 25 per cent while those of Stanley Leisure, where betting accounts for 45 per cent of profits, would rise by 49 per cent. William Hill and Coral Eurobet were also well placed to exploit
e-gambling growth. "The UK could offer the best environment for online gambling in the world," it said.
Andrew Burnett, head of the research team, remains bullish. "I am not expecting too many changes from our predictions," he says.
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|Publication:||The Racing Post (London, England)|
|Date:||Oct 2, 2001|
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