GAMING LICENCE DUTY (Hansard, 27 May 1970)

§ Mr. A. H. Macdonald (Chislehurst)
I want to object to the proposals set out in this Schedule. In different circumstances, I might have taken a little longer over this protest. I should not like the Schedule to be passed without making a small protest about the figures given at the beginning. When we first proposed taxation of gaming—a process with which I am wholly in agreement—we did so on the basis of rateable value. I always understood that to be a purely temporary measure until a more equitable basis was worked out.
I am all in favour of taxing gaming, but we should seek to be fair. If we are not manifestly fair there is real risk of driving gaming underground, with all the undesirable consequences which would follow. Before the introduction of this Bill, taxation of gaming was on a rateable value basis, but now we are to have a curious hybrid linked in large part to the rateable value basis and also bringing in the principle of leverage so that the taxation is higher if the rateable value is higher. This produces some curious anomalies. A difference of only £1 in rateable value can produce a difference of £27,500 in the basic tax, plus a difference in tax on tables of £6,000 per table if the number of tables exceeds five.
I do not wish to defend casinos, or that way of life, but it is important that we should go out of our way to see that taxation of them is fair. I do not understand why we did not get away from this basis of tax on rateable value and give consideration to the perfectly reasonable proposals of tax on turnover or the maximum stake and not on the curious basis which means that by a difference of £1 enormous variations are produced in the incidence of tax. There is a real danger not of driving casinos out of business, but driving them underground and producing a kind of bootleg casino and other undesirable practices which, by other legislation, we seek to prevent.
In other circumstances, I would have proposed an Amendment. In the present 1821 circumstances, I should not like this matter to go by without a protest.

§ Mr. John Smith (Cities of London and Westminster)
This Schedule illustrates the great disadvantage of pushing the Finance Bill through in such a short time. I wish to mention four aspects in which I think that this Schedule would have greatly benefited from a proper discussion.
First, there is the point made by the hon. Member for Chislehurst (Mr. Macdonald). In addition to the disadvantages he described, the Schedule will put a great strain on the valuers of the Inland Revenue. I do not mean a strain in terms of the amount of work they have to do, but a strain on their probity. There will be a great deal of money to be made by having an establishment in one category rather than in another. That will depend entirely on the valuers of the Inland Revenue.
Secondly, the Schedule illustrates the absurdities to which we are reduced. In certain circumstances, a table is to count as two tables. It will have to be decided when a table is two tables. This decision is based not only on the size of the table. The Schedule says that the regulations prescribing the size of the table may take account not only of its area, but also of its characteristics. What characteristics of a table will make it count as two tables? Is it perhaps if it has skirts on its legs?
Thirdly, and very important, in company law directors are responsible for the action of companies, yet in line 12 of page 39 we see that not only the directors but the general managers and secretaries or other similar officers of bodies corporate will be responsible for offences committed unless they can prove that they are not responsible. That is something that the House should debate.
I come, finally, to the sort of detail that doubtless would have been corrected if we had had proper consideration of the Bill. Line 26, on page 39, states: Any officer may (without payment) enter any premises… That is the first mention of officers. I should have thought it essential to know whether it refers to police officers, or officers of the Customs and Excise, or of the Army, Navy, or Air Force.

§ Mr. Patrick Jenkin
My Friend the Member for Cities of London and Westminster (Mr. John Smith), whom we shall be extremely sorry to miss after the General Election, has raised a number of valid points, as did the hon. Member for Chislehurst (Mr. Macdonald), whom equally, no doubt, we shall miss.
There really is a point on the desirability of pushing legislation through with the minimum of debate when it is complex and perhaps introduces new principles, as the Clause and the Schedule do. However, I am sure that all members of the Committee recognise that, faced with the alternative of refusing to have an election there is no doubt where the advantage lies, at any rate for this side of the Committee, and we are prepared to pay the price of immediate debate to get rid of the Government.
Will the Financial Secretary give consideration not only to the points made by the hon. Members for Cities of London and Westminster and Chislehurst, both of which have a good deal of substance, but to whether the table is likely to give rise to considerable unfairness because of the substantial jump which will take place when a gaming establishment moves from one rateable value to the next? We must remember that when the Home Secretary made his statement about his policy of restricting gaming to certain defined areas he said that the purpose was to provide a facility at holiday and tourist centres, to facilitate supervision, and to ensure that gaming was carried on only in decent surroundings.
The fear of a number of hon. Members is that even after the change introduced in the Bill the tendency will be to militate against the provision of decent surroundings because of the financial penalty of the duty chargeable as a result of improved facilities. There is bound to be a tendency to restrict space and the availability of such facilities as toilets, rest rooms, restaurants, reception areas, and so on, all of which will be cut down to try to make the premises qualify for a lower rate of duty based on the rateable value. It is very difficult to see how any system based on rateable value could avoid this unless there were many stages, with such a small gradation at each stage that the advantage of improved facilities was not offset by the 1823 disadvantage of substantial additional duty.
We have here only three categories—premises of a rateable value not exceeding £1,000, those with a rateable value from £1,000 to £2,500, and premises exceeding £2,500. The second category is a very big slice. If it were divided into two, with a slice of £1,000 to £1,500 bearing a minimum rateable value charge of £1,500 instead of the £6,250 for six months, we should have a much more even gradation. Had there been time, an Amendment to that effect would undoubtedly have been moved.
On the Chancellor's present proposals a club with a rateable value of £1,500 would be required to pay in gaming licence duty on the basis of, say, seven tables an annual amount of £29,500. If the casino operator reduced the rateable value to one not exceeding £1,000, which takes it into the first category, the duty on the Chancellor's proposed rates would be only £4,500. A jump from £4,500 to £29,500, merely by a change in the rateable value of £500, seems incredible. That is why I think that the gradations in the table in Part I of the Schedule are too abrupt.
Whilst not necessarily going the whole way with the hon. Member for Chislehurst, I feel that this will require most careful consideration before next year by a new Government. It may well be right to move away altogether from the concept of rateable value, but I make it perfectly clear that I am giving no undertaking on this. We should consider carefully whether the table in the Bill does not give rise to considerable unfairness because of the very steep increase in duty arising when the rateable value exceeds £1,000.
The practical argument put by the Home Secretary is that it is desirable that these establishments should be run in decent surroundings. Our fear is that this will not happen even under the modifications in the Bill. I hope that the Financial Secretary can give an undertaking that in the unhappy event of his having anything to do with this next year he would be prepared to consider the matter.

§ Mr. Taverne:
I can assure the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) that we shall most 1824 carefully weigh what he said. I appreciate that we are labouring under some disadvantage in discussing very briefly a Clause and Schedule as wide-ranging as these, which institute an entirely new system of taxing casinos. It is not only the Committee that is under some disadvantage. I must confess that I am also at a disadvantage in that I am not sure that I have found out all the answers to the questions put to me by the hon. Member for Cities of London and Westminster (Mr. John Smith).
I shall deal, first, with the questions asked by my hon. Friend the Member for Chislehurst (Mr. Macdonald). Different methods of taxing casinos had to be considered. Consideration was given to whether the duty should be geared to turnover or staking limits, which were the two other main alternatives. The difficulty of relating excise duty to turnover on gaming is that unless there is a cagnotte there is no reliable means of establishing what turnover is. That idea proved very unpopular with the operators, and was rejected by the Gaming Board.
The cagnotte is a system used in continental countries in some games in which a percentage of the winnings is retained to meet expenses and profits of the house. It is a system which is used in Belgium. The idea of a tax on turnover was considered by the Gaming Board. It is unpopular because it slows down the pace of the game, it would be difficult to enforce and would require constant vigilance and extra staff. It would not suffice to establish a precise turnover on some games, such as craps, because of the rapid speed at which the game is played and the complicated rules to which the game is subject.
When it comes to a stake limit, there is a difficulty that the duty related to minimum stakes might be widely avoided by the simple device of an artificial minimum, while a duty related to maximum stakes could easily be evaded unless there was a high degree of control, with high staff costs, and so on. On balance, it was concluded that the best way of taxing casinos was a combination between rateable value and a tax on tables, as we propose.
As regards the number of tables and how one table is to be treated as two 1825 tables, the word " table " had to be defined because of difficulties, such as craps being played on the floor. The Commissioners will be empowered to prescribe by regulation the maximum areas of table by measurements or other characteristics. In this field there is a premium on evasion and there must be ways of countering it. Therefore, it was necessary to have the definition of " table " as set out in the Bill.
I cannot give the hon. Member for the Cities of London and Westminster the answer he deserves as to the " proper officer ". I can tell him who the proper officer is. It is the officer for Customs and Excise in the area. I looked quickly through the Bill to find out whether " officer " was defined and could not see it, nor could I find any cross-reference to other Acts. I will write to the hon. Member to see where the definition is to be found.

§ Mr. Chapman
Is there not something at the top of page 41?

§ Mr. Taverne
It may be that the key is to be found in Schedule 10 to the Gaming Act, 1968, which refers to an " officer of customs and excise ". I could not offhand find the place in the Bill where " officer " was defined.

§ Mr. Peter Bessell (Bodmin)
I accept that the Committee is operating in difficult circumstances—indeed, I found myself in difficulties earlier this afternoon on behalf of my own party—but I feel confident that the hon. Member for the Cities of London and Westminster (Mr. John Smith) will not be satisfied with the reply given to him by the Financial Secretary to the Treasury.
The hon. and learned Gentleman raised two points which are very important indeed. The words on page 39 from line 10 onwards appear to mean that virtually any employee of the company will be responsible. In any ordinary company, under company law this would be the responsibility of the director or company secretary. It is inequitable to suggest that a general manager or similar officer should take the responsibility. This sets a wholly unfair precedent.
On the question of the phrase " any officer ", in line 26, surely even at this late stage there is no reason why the hon. 1826 and learned Gentleman could not undertake to insert " officer of customs and excise " which I understand to be his interpretation of the meaning. Presumably we are to have a Report stage and this could still be done. These matters will cause considerable confusion at a later stage. Surely there is no reason that this should not be rectified now.
There is still time. Parliament is still sitting and we have a responsibility to discharge our duties in a proper manner. I feel certain that the Committee, and indeed, the whole country will read the hon. and learned Gentleman's reply with some astonishment and a great deal of concern.

§ Mr. Patrick Jenkin
I endorse the remarks of the hon. Member for Bodmin (Mr. Bessell). Even if we are to hurry through the Bill so that Parliament can be dissolved, the hon. and learned Gentleman should be able to answer questions about offences and enforcement officers. I hope that he will be able to do so.

§ Mr. Taverne
I will deal with these two points. There is one answer to be found in the Customs and Excise Act, 1952, which has to be read together with the Bill. In that Act the definition of " proper " is as follows: in relation to the person by, with or to whom, or the place at which, anything is to be done, means the person or place appointed or authorised in that behalf by the Commissioners. It is not as if there is not a definition of the word " officer ". It was simply that I could not find it.
As regards the point about liability, which was raised by the hon. Member for Bodmin (Mr. Bessell) in gaming the considerations to be applied are entirely different from those which apply to company law. In gaming, arbitrary powers are imposed by an arbitrary body—powers which received the encouragement of the Opposition—to deal with a problem of evasion, which is different from the problems which apply to companies. The liability imposed by the Schedule is to deal with a special field.

§ Mr. Bessell
In paragraph 11 of Schedule 1, we see: Where an offence under paragraph 9 or paragraph 10 above has been committed by a body corporate, every person who at the time 1827 of the commission of the offence was a director… is liable. It seems to me that the intention of the paragraph is to indicate that company law applies in the sense of a body corporate. It is difficult to see why the hon. and learned Gentleman seeks to make a distinction.

§ Mr. Taverne
I do not understand that. It refers to liability for an offence which has been committed and includes similar officers to those of secretary or general manager. It then states that they may prove that the offence was committed without their consent or connivance, in which case they would not be liable. But it has nothing to do with company law as such.

§ Mr. John Smith
I do not want to labour the point. I raised these four matters to illustrate that it is a mistake to push through the Finance Bill in this way. In an age when the State takes away £20,000 million of peoples' money, the country at large regards the Finance Bill as the most important legislation considered by Parliament in the year. Time was when we recognised that fact and discussed the whole of the contents of the Finance Bill in Committee on the Floor of the House. Then the Committee stage was taken upstairs and was discussed by a small number of hon. Members. Finally, this year, it is proposed that we should dispose in one afternoon of the Finance Bill and seven other Bills.

§ The Deputy Chairman (Mr. Harry Gourlay)
Has the hon. Member completed his speech?

§ Mr. Smith
Yes. Mr. Gourlay. But I shall be saying more later.

§ The Deputy Chairman
I was about to stop the hon. Member for being out of order.