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Taxation (Bingo Clubs)

Volume 496: debated on Wednesday 15 July 2009

The Petition of residents of Llanelli,

Declares that the imposition of Gross Profits Tax of 22 per cent. on bingo clubs, compared with a gaming industry average of 15 per cent., is unreasonable and will be damaging to the continued viability of small bingo clubs, which play an important part as centres of the community as well as places of entertainment.

The Petitioners therefore request that the House of Commons approves a Gross Profits Tax maximum rate of 15 per cent. for bingo clubs.

And the Petitioners remain, etc.—[Presented by Nia Griffith, Official Report, 30 June 2009; Vol. 495, c. 273 .]


Observations from the Chancellor of the Exchequer:

The Government notes the petition, and makes the following observations:

The Government continues to recognise the important social role played by bingo clubs in many communities, especially for pensioners and women.

Budget 2009 introduced a package of reforms intended to simplify the bingo tax regime, continuing a process of reform that began in 2003. Bingo participation fees became VAT exempt, and bingo duty was increased to 22 per cent. The Bingo industry had been campaigning for some time for VAT exemption on bingo participation fees, and the bingo duty increase should not be seen in isolation.

The Treasury’s estimate of bingo’s effective tax rate before the Budget was 24-25 per cent., an estimate agreed with the industry. It is not the case that the “gaming industry average” effective tax rate is 15 per cent.

The effective tax rate on bingo, now at 22 per cent., is comparable to the average effective tax rates on gaming machines, casinos and the national lottery, all of which are taxed within a 20-25 per cent. range. Before the Budget the effective tax rate on bingo was estimated at 24-25 per cent., which in turn was down from 35 per cent. as recently as 2003.

The bingo industry will benefit from the increased allocation of category B3 gaming machines (machines typically found in bingo halls that can offer up to a £500 prize) that a club may offer. The maximum allocation was increased from 4 to 8 in February 2009. The industry will also benefit from social regulation changes recently implemented by the Department for Culture, Media and Sport. The changes double the stake and prize limits for category C gaming machines, to £l/£70. Estimates from BACTA, the amusement machine trade association, suggest that gaming machine revenue could be boosted by as much as 20 per cent. following these changes. At Budget 2009 the Government amended the amusement machine licence duty categories to realign with the new regulations.

The Government recognises the challenges faced by the bingo industry, including changing tastes and greater competition in the wider leisure sector. The Government will continue to engage with the bingo industry about the state of the sector and the impact of taxation.