Britain’s Brown Bounces Betting Businesses
A further chapter in Britain’s economic suicide comes from Tax Notes International today (subscription only):
In a move apparently aimed at lowering their tax bills, major U.K. sports bookmakers William Hill and Ladbrokes plan to relocate their sports betting operations to Gibraltar, according to media reports.
The move by William Hill was announced on August 4 and was subsequently followed by Ladbrokes’ announcement on August 6. The moves are projected to cost the U.K. Treasury millions of pounds in tax revenue, according to an August 6 report on www.guardian.co.uk.
The departure of these sports betting firms, particularly if other sports bookmakers follow, could put the U.K.’s entire online gambling market (the largest legal betting market in the world) beyond the reach of either the Gambling Commission or the Treasury, according to media reports.
Ladbrokes CEO Christopher Bell cited “intense competitive pressure” as the main spur pushing his company offshore. “Our award winning sportsbook Ladbrokes.com is the biggest in the U.K. market but faces aggressive competition from offshore operators who hold a very significant cost advantage by operating from low tax jurisdictions. Operating from the U.K. has become unsustainable and we will relocate by the year end,” he was quoted as saying in an August 6 statement on the Ladbrokes Web site.”
The 15 percent tax on online gambling (the industry had lobbied for a 2 percent or 3 percent tax), one of Gordon Brown’s last acts as chancellor of the Exchequer, has been generally seen as an embarrassment for London, which had sought to position the U.K. regulatory approach as world leading. Instead of applying for licenses with the Gambling Commission as the laws’ drafters had hoped, members of the online gambling industry have boycotted the U.K. and headed offshore.
“The U.K. has effectively turned its back on the industry. It will now be almost impossible for a U.K.-based operator to compete with offshore business,” John Coates, chair of the Remote Gambling Association, said in a March 2007 statement. Sports betting became the last gambling subindustry to remain onshore.
Currently, the total tax faced by U.K.-based sports bookmakers includes the 15 percent profits tax, a 15 percent VAT, corporate tax, and a special 10 percent tax for horse racing betting profits. Tax rates in offshore locations such as Gibraltar, Malta, or the Isle of Man are only about 1 percent to 2 percent, according to the statement on the Ladbrokes Web site, and there is no special horse racing profits tax.”
British Economic Suicide
A Bloomberg story on one cause of the ongoing British economic disaster under Prime Minister Gordon Brown:
Andrew Wesbecher moved to London from New York in 2006 to sell software to banks and hedge funds. This month he joined the exodus of American expatriates fleeing high taxes and the city’s shrinking financial industry . . . Americans are heading home as Britain plans a 50 percent tax rate for those who earn more than 150,000 pounds ($248,000) a year and employers cut benefits for workers living abroad, reducing the allure of London. That comes a year after the U.K. said foreigners who have lived in the country for more than seven years must pay 30,000 pounds annually or give up the special status that shields overseas income from British taxes.
Since the 1980s, London has boomed as an international city open to the world’s entrepreneurs and their wealth, and perhaps home to more billionaires than any other city. The British economy as a whole has done quite well, pulled ahead by London and driven by a new free-market spirit in the wake of Margaret Thatcher’s privatization, deregulation, and tax cuts. Thatcher rightly argued that her cuts to income tax rates “provided a huge boost to incentives, particularly for those talented, internationally mobile people so essential to economic success.” High tax rates at the top end were a “symbol of socialism” that she wanted to scrap.
Brown is killing the free-market goose that laid the golden eggs of Britain’s success. I really don’t understand the vision of such politicians — don’t they know what they are doing? I want people to be successful. I want entrepreneurs to create wealth. I love growing, vibrant cities. Why do some people want to destroy all that?
Filed under: International Economics and Development; Tax and Budget Policy
Can I Vote for This Guy?
Here’s how YouTube describes the following clip:
Daniel Hannan, Conservative MEP for South East England, gives a speech during Gordon Brown’s visit to the European Parliament on 24th March, 2009. Read Daniel’s blog at www.hannan.co.uk.
Can I import him?
Cato on Facebook
Cato on Twitter
Cato on YouTube
Cato Tweets