Rachel Reeves’ hopes that gambling taxes could plug a fiscal gap could be misplaced, according to Mauricio Alencar.
The Chancellor of the Exchequer is considering raising taxes on gambling in the UK to generate billions of pounds of revenue later this year along with a rise in other levies such as sugar tax.
Proponents state that the figure raised could reach as much as £3bn, but economists have forecasted that she may need to raise a significantly higher figure of around £20bn to plug a hole created by lower growth forecasts, higher welfare spending and higher debt interest payments.
Reeves’ tax plans could fall short
Alencar, a Politics and Economics Reporter for City A.M., spoke on its YouTube channel to explain how Reeves’ taxation hopes may be dashed later in the year.
He said: “Increasing sin taxes may not be the way to go for the chancellor. In a report published in July, the Office for Budget Responsibility, which judges the costs and benefits of all government policies, said forecasts for the intake from these taxes in the past, were overestimated in previous reports.
“Errors in forecasting for sin taxes could see it make more moderate projections at this year’s autumn budget.”
Plus, a separate analysis by the Scotch Whiskey Association showed that the Treasury collected £676m less tax than the OBR forecast for spirits duties in March 2023.
This is a figure Alencar suggested the gambling sector could use to make the case for a more balanced tax regime rather than constant hikes.
“This points to the significance which forecasting errors could have on public finances which could lead to more government borrowing than hoped for. Tax experts said government revenue forecasters often struggle to measure behavioral changes when excise duties are changed. They said this tendency meant tax revenue from sin taxes would often be overestimated.”
Cabinet reshuffle could boost Horse Racing hopes
With the budget set to be announced on Wednesday 26th November, all eyes will be on whether tax rates will be raised in the UK gambling market – a move that could have significant ramifications for operators across the board.
Prime Minister Keir Starmer’s cabinet reshuffle is the latest development in the story with Reeves now set to report directly to the PM, who wants greater oversight of the government economic policy ahead of the budget in the autumn.
The Horse racing industry is one key area braced for impact but the insertion of the new Treasury Chief Secretary James Murray, who was previously vocal about working closely with the horse racing sector to mitigate any negative consequences, has introduced a new layer to the situation.
