There are some activities that governments seem to feel need to be taxed at the highest possible level. Gasoline taxes are one of these taxes. The price of a liter of gasoline is about one half taxes depending on the jurisdiction.
In the news recently is the effort of the British government to increase so-called sin taxes which include cigarettes and wine and the main subject of our news reports: online gambling.
The increases for users of wine products will end up paying a few pence more per bottle. Regular wine will go up 7p per bottle and sparkling wine will go up another 10p. This sounds like very little but we must remember that taxes were already very high for these products.
Small increases such as the 7p and the 10p rises in wine are called “incremental increases” in which each increase is small relatively speaking but the cumulative effect is that some consumers pay a very high tax on their delights which are termed “sins” by the government.
The government has been trying to get British citizens to stop smoking for two generations at least. It seems that all of the government’s efforts combined have helped as cigarette smoking in Britain is far below the levels of the 1950’s. One way the government discourages cigarette smoking is through taxes. The new tax on cigarettes will send the price of a single pack to over £10.
Finally, we reach the area of greatest interest to readers of the news as reported here at Slots Play Casinos: online gambling. There is a good reason we call our area of interest gaming instead of gambling: the gambling element should always be second to the gaming aspect.
The government sees it otherwise. The new tax is fully £1.25 billion over the next five years. This massive tax will likely reduce the casinos’ ability to return as much money as previously was returned to players. Money is returned to players in many ways one of which is online casino bonuses. Industry people are afraid that reducing bonuses will reduce players’ participation which will reduce profits which will result in less tax revenue collected than under the previous tax schedule.
Tax Effects in Real Time
The increased taxes on online casino gaming are supposed to offset the lost tax revenue from the government’s decision to reduce the maximum bet on FOBT’s (Fixed Odds Betting Terminals) from £100 to £2. The tax shortfall from that draconian reduction in bets allowed is expected to be about £1.25 billion so the government hopes that the new tax on online gaming will make up the difference.
Of course, by doing so the government risks having the same shortfall in online gaming revenues as they expect to see in FOBT’s.
The decision made last year to delay the new tax on FOBT’s until this October was criticized at the time by Tom Watson, Labour Deputy Leader who said that, “By rolling back on their promises the government are allowing greed to triumph over good as the bookies trouser another £900 million in revenue.”
Watson ignores the overriding need of the government for revenue. His only solution for revenue enhancement is to raise taxes notwithstanding the long-acknowledged reality that raising taxes often reduces revenues. The next step from Labour would be to nationalize enterprises.
FOBT’s are said to be very addictive. That is why the government sought to reduce the maximum bet allowed. The government is counting on online gaming to increase as FOBT gaming decreases and that online gaming will not prove to be as addictive as the FOBT’s are said to be.
That will put even more pressure on online casinos to monitor the gambling practices of their gamers ever more closely and to enhance existing programs that are designed to lower the gambling addiction risk for online casino gamers.
Beer and Whisky
The government surprised everyone by delaying increases in taxes on beer and whisky. These increases were supposed to be for 3.4% which would be in line with inflation. That decision, while it surprised everyone, also came under harsh criticism as well.
The rises in some taxes, the delay in rises in other taxes, the lowering in wagering for FOBT’s has everyone involved in a state of confusion. The government can change the rules at any time. A spokesperson for Camra, a beer lovers’ advocacy group, welcomed the news regarding no new taxes on beer because it, “it no doubt will go some way to keeping the British pub going tradition affordable.” So, culture is playing a big part in the decisions the government is making regarding taxes to bring in the money the government needs to maintain services.
In the parlance of the British government online gaming is called remote gambling. Some critics are saying that just as the government looks for euphemistic ways to describe a perfectly simple gaming platform, so is the never-ending confusion over “sin” taxes. At the present time, some sins are not quite as sinful as other sins even though they use roughly the same product: alcoholic drinks.
Online gambling is now considered more sinful than gambling at an FOBT because the largest bet at an FOBT has been reduced to literally a few pennies. Perhaps the online gambling leaders should ask the government to make the maximum bet on slots or table games also £2. Then the tax revenues would slip even further.
It would appear that online casino gaming is at the center of a controversy with several sides to it. First are the people who say that the government – this applies in many countries, not just in Britain – should certify and regulate online gambling because it generates tax revenue.
There are those who say that online gambling is too accessible and therefore too addictive and should thus be made illegal. Some say that it’s a matter of personal freedom and choice. In their view, if a person wants to play putt-putt golf for £100 per week, who can tell him no and that the same logic applies to online gaming.
Finally are the interests that directly benefit from the illegalization of online gaming – land based casinos, race tracks, and lotteries.