Over the last few months, the bingo world has been waiting with baited breath to see if there will be any change to the controversial measures introduced by the Government that has hiked the tax paid by the offline bingo industry from 15% to 22%. And now, it seems like the Rank Group, one of the biggest land based bingo hall operators who run industry stalwarts like Mecca Bingo have finally offered a formal response to the Government, urging them to change their mind.
HM Treasury has said that it intends any changes to gaming machine taxation to be revenue neutral for the Exchequer, with a gross profits tax (GPT) replacing Amusement Machines Licence Duty and Value Added Tax. But in a letter to Sarah McCarthy-Fry MP, Exchequer Secretary to the Treasury, Rank said the imposition of a new taxation regime for machines, linked to gross profits, would be a “further unwelcome burden” at this difficult time economically.
Echoing the sentiments of many that an increase in tax will cripple the already ailing land based bingo industry, Rank said that regardless of the rate of gross profits tax on introduction, there will be a number of additional costs to businesses in complying with a new set of rules, and has stated that the company’s “strong preference would therefore be to maintain the current system.”
Rank has previously stated that gaming machine gross profits tax would need to be set at a rate of 15% in order to be neutral for the company, a level consistent with the current rates of general betting duty, remote gaming duty, football pools duty and the starting rate of casino gaming duty. Many have considered the changes in tax to unfairly outclass Bingo against heavier forms of gaming and even online bingo, which are all subject to the smaller 15% tax rates on profits.
The figures estimated by Rank prove that there will be grave financial implications should the measures be finally implemented. The company estimates that it would incur an extra £1.6 million per annum in additional taxation for every percentage point over the 15% neutral rate. Within Rank, these costs would mainly be borne by Mecca Bingo via its 103 bingo clubs. For a larger operator such as the Rank Group, this would be a sizeable dent in profits, but for the smaller operators, these escalating costs could see many bingo halls shut their doors for good.
A high profile campaign was mounted in April following the announcement in the 2009 Budget of the proposed measures, leading to a Parliamentary debate and a shoot of hope for the industry that they could turn the tide on the misfortunes of the offline bingo industry. However, MP’s voted overwhelmingly in favour of keeping the measures, leading to a summer blighted by bingo club closure after bingo club closure. Rank have even admitted they would have to take a strategic review of the profitability of their land based bingo operations, saying a review of all supplier contracts, numbers of machines in operation, overall gaming product mix, future investment strategy and individual club profitability would be necessary should the taxation rise be fully implemented.
We hope that by the Bingo operators themselves shouting a little louder to the Treasury, that something can be done before it’s too late for many bingo clubs in communities up and down the UK.
