The Labour Party is facing mounting pressure to consider a significant increase in the taxation of gambling companies, with new analysis suggesting such a move could generate up to £1.6 billion in additional revenue for the Treasury.
According to research conducted by the Social Market Foundation (SMF), increasing the levy on betting firms could provide a crucial financial boost to fund vital public services, including the National Health Service.
Call for Fiscal Review
The cross-party think tank has urged Shadow Chancellor Rachel Reeves to include a review of gambling taxation in her preparations for government. The proposal suggests that aligning the tax rate with other "sin taxes" on tobacco and alcohol could create a fairer system while generating substantial public funds.
SMF research director Aveek Bhattacharya stated: "There is a strong case for increasing taxes on gambling to better reflect the costs it imposes on society and to help fund public services like the NHS that have to deal with the consequences of gambling-related harm."
Current System Under Scrutiny
Currently, gambling operators pay 15% on their gross gambling yield, along with a separate statutory levy to fund research, education, and treatment of gambling harm. The SMF analysis indicates that increasing the main tax rate to 20% could raise approximately £300 million annually, while a 30% rate could generate around £1 billion.
A more ambitious tax rate of 40% – comparable to duties on tobacco – could potentially raise up to £1.6 billion for public coffers.
Political Considerations
The proposal comes as Labour continues to develop its economic strategy ahead of the next general election. The party must balance the potential revenue benefits against concerns about impacting an industry that employs thousands and contributes to sports sponsorship.
However, with public services facing unprecedented financial pressures and the NHS requiring significant investment, the gambling tax review presents a potential solution that aligns with Labour's commitment to fair taxation and improved public funding.
A Labour spokesperson confirmed the party would consider the recommendations, stating: "We welcome this contribution to the debate about how we ensure gambling companies pay their fair share toward tackling harm caused by their products."
