Former Prime Minister Gordon Brown backs gambling tax reform to tackle child poverty
Online casinos and slot machines should be taxed more to raise some of the money needed to cover the cost of lifting children out of poverty, according to a new report backed by a former prime minister.
Reforms to gambling taxes could generate the £3.2 billion needed to scrap the two-child limit and benefit cap, the Institute for Public Policy Research (IPPR) said.
The think tank said axing the policies could lift half a million children out of poverty and “reverse years of rising hardship for low-income families”.
The two-child limit restricts child tax credit and universal credit (UC) to the first two children in most households, while the benefit cap sees the amount of benefits a household receives reduced to ensure claimants do not get more than the limit.
The Government is expected to publish a child poverty strategy in autumn, and a multitude of campaign groups have said it must contain a commitment to do away with the two-child limit.
The IPPR argued that, in the face of covering the costs of scrapping the policy, it feels “fair” to ask the “highly profitable” gambling industry to contribute more.
Echoing this, former prime minister Gordon Brown said: “Thanks to IPPR’s report, we now know that taxing gambling more fairly would fully fund the first crucial step in the war we must wage against child poverty: ending the two-child limit and lifting the benefit cap.
“There are many reasons why the highly profitable betting and gaming industry should pay a fairer share towards the cost of UK’s unmet needs. Most important is that it would enable half a million children to be lifted out of poverty in this autumn’s budget, and so help to build our country for the next generation.”
The IPPR suggested increasing taxes on online casinos from 21% to 50% and raising those on slots and gaming machines from 20% to 50%.
The organisation also proposed raising general betting duty on non-racing bets from 15% to 25% which it said would bring other sports in line with the rates paid by horseracing.
The IPPR said raising gambling taxes in the way they suggested would be unlikely to reduce overall government revenue.
Henry Parkes, principal economist and head of quantitative research at IPPR, said: “The gambling industry is highly profitable, yet is exempt from paying VAT and often pays no corporation tax, with many online firms based offshore. It is also inescapable that gambling causes serious harm, especially in its most high-stakes forms.
“Set against a context of stark and rising levels of child poverty, it only feels fair to ask this industry to contribute a little more.”
But a spokesperson for the Betting and Gaming Council said they rejected the “economically reckless, factually misleading” proposals which they insisted “risk driving huge numbers to the growing, unsafe, unregulated gambling black market, which doesn’t protect consumers and contributes zero tax”.
They added: “Further tax rises, fresh off the back of Government reforms which cost the sector over a billion in lost revenue, would do more harm than good – for punters, jobs, growth and public finances.”
