Government look at abolition of tax

There was a cautious response from bookmakers' representatives yesterday to a newspaper report that the Government is considering the abolition of betting tax. The report suggests that the Treasury is ready to agree a deal with bookmakers under which betting duty would be replaced by a tax on their profits. The dead-bat response from the major bookies, however, was that the radical scheme is just one of a number of options under consideration.

There was a cautious response from bookmakers' representatives yesterday to a newspaper report that the Government is considering the abolition of betting tax. The report suggests that the Treasury is ready to agree a deal with bookmakers under which betting duty would be replaced by a tax on their profits. The dead-bat response from the major bookies, however, was that the radical scheme is just one of a number of options under consideration.

"If we could get down to zero [deductions for punters] then that would be wonderful,'' Tom Kelly, director-general of the Betting Office Licensees' Association, the major bookmakers' trade association, said. "There is a dialogue going on, everyone knows that, but my understanding is that they are looking at all possible options and they have not finished the process of considering what action, if any, to take.''

The idea of a tax on bookies' profits to replace duty has been around for several years, but has gained ground only since several bookmakers set up off-shore tax-free telephone and internet betting operations. In the medium to long term, a significant part of the Treasury's return from betting duty will be lost overseas, and the new plan - particularly if it required major players such as Ladbrokes and Hills to bring their offshore businesses back to Britain - would arrest the decline.

A key point for discussion, however, is the level of the tax on bookmakers. The layers are keen to see deductions removed, since it will inevitably increase their turnover, perhaps by as much as 100 per cent.

"Perhaps'' is not good enough for Treasury economists, however, who know precisely how much they make from betting, and are unlikely to recommend an untried new system without good reason. Until exact figures and predictions have been run through every computer model going, a firm decision on the future of betting tax is unlikely.

It may be, however, that the mandarins are close to being convinced, which would be marvellous news not just for punters and individual betting shops - who will, after all, pick up much of what is currently paid as tax in any case - but also for the major betting companies. Britain could yet become the focal point of the global betting industry, a prospect which could make shares in Ladbrokes the shrewdest investment of all.

* The Jockey Club are to hold a disciplinary committee inquiry into the controversial abandonment of Lingfield's all-weather meeting on 30 December, when the surface was found to be unsafe by jockeys who had arrived at the start for the first race.