Gordon Brown: gambling tax could fight child poverty

Gordon Brown, the Prime Minister from 2007 to 2010, has publicly called for the Labour Party to increase the gambling tax to provide more money for children in need.

This is not the first time that the gambling tax has been raised within the Labour Party. 

Brown accuses the Conservative Party of putting “4.5 million children into poverty” and insists it is an urgent issue for the Labour Government. 

This is in preparation for the new budget due to be published in the Autumn of this year. 

This proposed move has two parts: 

• Adjust taxes 

• Reduce child poverty rates  

What is Brown proposing? 

Brown is responding to a report by the Institute for Public Policy Research (IPPR), which claims this tax increase would “lift half a million children out of poverty”. 

As a former chancellor, Brown understands the budget. 

He claims, “the first step is raising billions by taxing the extraordinarily profitable gambling and betting industry”. 

This industry would be one of the least harmful options to the public, as the profits for regulators are already so high. 

When looking at Europe, we have the lowest levels of gambling tax, yet our child poverty levels are “far worse than in most European countries”. 

The report proposes a selection of ideas, involving both finance and policies. 

Here is a breakdown of their main points: 

• Remote gaming duty should be raised from 21% to 50%. 

• Machine gamer duty should be raised from 20% to 50%

• General betting duty should be raised from 15% to 25%, with the exception of horse racing bets (they already pay an extra 10%). 

• The two-child limit on universal credit should be removed. 

• The benefit cap should be scrapped.

The IPPR and Gordon Brown are proposing that if all these are introduced at the same time, it will significantly reduce the levels of child poverty. 

These benefit caps have been linked to increased financial struggle, but this new move would remove them, giving families an extra “£132 a week”. 

Change for the better…

Gordon Brown and others in the party are calling for this change because they believe this one tax change could change millions of lives for the better. 

The two-child benefit cap was introduced in 2017 by the Conservative Party. 

Since then, it has been linked to the increasing financial hardship that families are going through.

The Labour Party have been openly critical of this cap, so will they answer this call to action? 

Lessons from the Netherlands

Whilst this seems like a well-thought-out plan, how likely is success? 

The Netherlands Gambling Authority (KSA) recently had the same idea to raise the gambling tax and create some extra revenue for the Netherlands Government. 

However, the KSA chair recently admitted this caused a “decrease in gross gambling revenue for the entire market”. 

This is due to providers being under more financial pressure. 

A decrease in gambling revenue also means a decrease in the tax revenue, but the KSA said they had “room to absorb the impact”. 

Could it backfire for the UK? 

This cautionary tale shows the UK Government what consequences there could be if it were to raise taxes. 

The Netherlands noticed a "significant increase…now flowing through illegal, unlicensed operators”. This suggests that a crackdown on these illegal operations should be included in the new plan if it were to go ahead. The Government would need to make sure that the United Kingdom Gambling Commission (UKGC) has the capacity to handle this. 

What does this mean for the gambling industry? 

Higher taxes for gambling companies could mean more losses for players, as the operators would try to keep their profits up. 

This could encourage the use of black market casinos, which they have begun to see in the Netherlands. This is an issue because more players playing at unregulated casinos may lead to increased instances of problem gambling. 

On regulated sites, players can follow responsible gambling guidelines. Could solving one problem simply create a new one?  

The increased tax proposal would avoid hitting any bingo, lottery or horse racing organisations, and focus primarily on online gambling instead. 

Pros and cons of a tax increase

While there are benefits to the proposed tax increase, there are also several drawbacks which need to be considered. 

Pros 👍	Cons 👎
Could raise up to an extra £3.2bn annually for the Government.	May increase the levels of black market gambling.
More funds for the third and fourth children in families.	May harm licensed British gambling companies.
Would increase the amount that these large companies are contributing to the economy.	Could take time to implement, when these families need help sooner rather than later.

Disapproval from the regulators 

The Betting and Gaming Council is opposed to this suggestion, claiming it “risk(s) driving huge numbers to…unregulated gambling markets”.  

A large proportion of these gambling operations are already based offshore, meaning they don’t pay any tax to the UK Government. 

The Betting and Gaming Council believe that the possibility of driving players to these sites would “do more harm than good”. 

The ultimatum

With these dangers of online gambling outlined, it is down to the Government to decide if this proposal is worth it.

With the possibility of helping 500,000 children, it seems too good to be passed up. 

The general public seems to agree with Brown and wants to see online gambling taxed even higher. 

One user on X writes;

 “Make mega-rich gambling giants pay their fair share”.

 With another saying; 

“It’s crucial to address issues like child poverty…tax reforms can make a significant impact”. 

At the end of the day, they agree that something needs to be done about children in poverty. If done correctly, this gambling tax could be the answer.