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Our View: Provisions of gambling law make no sense.

THE STATE was perfectly within its rights to tax the revenue of betting companies, even if its decision to take 10 per cent of the net betting revenue (after winnings are subtracted) does not seem the most rational principle. It would have been more reasonable to put a 10 per cent tax on every bet submitted, instead of taxing the revenue of the companies, which is a rather unorthodox practice.

State revenue might increase but it will at the same time reduce the corporate tax that would be paid by betting companies as their profits would be significantly reduced. If every bet was taxed, the punters would be paying the 10 per cent tax and the profits of the companies would remain unaffected, in which case the state would earn significantly more. And a betting person would still place a bet even if he had to pay a 10 per cent tax on his stake. But it seems our deputies wanted betting to remain affordable to the poorest members of society.

What seems ridiculous is the provision to take an additional three per cent from the companies' net revenue and give it to the Cyprus Sports Federation (KOA) which would then give half the money to the Cyprus Football Federation (KOP), a third to programmes against gambling addiction and the remainder to other sports federations. Leaving aside the questionable practice of taxing companies on behalf of the Cyprus Sports Federation, why have deputies legislated for a subsidy of profligate football clubs?

Cyprus' football clubs are already heavily supported by the taxpayer, KOA giving millions every year. Should the state encourage more profligacy by the clubs by giving them even more money? Surely football clubs, the majority of which are insolvent, should be encouraged to cut costs instead of being rewarded for living beyond their means with even more money.

At the weekend the AGM of Omonia, Cyprus' best-supported club, was told that the club had a deficit of e1/426 million and no liquidity. In reality the club is bankrupt, but the taxpayer will give it even more money that it is incapable of using prudently. Most clubs are in a similar predicament, but they keep signing foreign players on big wages they cannot afford to pay. The state and KOP should be taking steps ending this lunacy and forcing clubs to live within their means instead of giving them even more cash.

Deputies are not helping the clubs with the 3 per cent tax on betting companies. On the contrary, they are encouraging their profligacy, at the taxpayer's expense.

Copyright Cyprus Mail 2012

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Publication:Cyprus Mail (Cyprus)
Date:Jul 6, 2012
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