Deductions may follow levy boost

Racing's income from the levy for 2002-03 is expected to increase by 50 per cent, to more than £90 million, but there could be bad news for punters just around the corner.

Culture Secretary Tessa Jowell's decision that under the 41st levy scheme, which begins on 1 April, bookmakers will pay an average of nine per cent of gross profits on all horseracing bets rather than betting turnover, is likely to spur them to seek a levy replacement scheme also based on profits.

She said: "I understand that the racing industry may be disappointed that I have decided to introduce a gross profits levy, but this is wholly consistent with the Government's introduction of a gross profits betting tax and is the fairest and most reliable indication of the bookmakers' capacity to pay."

Sports minister Richard Caborn, speaking at the British Betting Office Association industry forum, added: "Gross profits tax has changed the economics of the betting industry into a high turnover, low margin business. It would have been hard to justify bookmakers paying more at the moment."

Caborn also criticised the bitter battle between racing (The British Horseracing Board) and the bookmaking industry that necessitated the levy prognostications. It is estimated that the scheme will yield between £90m to £105m from the betting industry's profits. But if those profits start to fall, punters could face a return to paying tax on their bets again.

Keith Brown, Race Course Association chairman, hinted that bookmakers, faced with paying for pre-race data and pictures in their betting shops, may introduce tax deductions again in their establishments. It was only recently that betting tax was axed to greater acclaim by the industry, and it will be seen as unfair, to say the least, that the breakthrough was given with one hand and now may be taken away with the other.