GAMING LICENCE DUTY (Hansard, 16 July 1975)

§ Mr. Rees-Davies
I beg to move Amendment No. 1, in page 3, line 30, column 2, leave out '12,000'.

§ Mr. Deputy Speaker (Sir Myer Galpern)
With it we may also take the following amendments:
No. 2, in page 3, leave out line 31.
No. 3, in page 3, line 31 at end insert— 'Provided that the charge for each table in excess of eight in any premises shall be one half of the charge shown in the third column of the Table above.' No. 4, in page 4, line 5, at end insert— '(3) In section 16(2) of the Betting and Gaming Duties Act 1972 (supplementary provisions as to gaming licensing duty) for the definition of "rateable value" there shall be substituted:— 'rateable value' in relation to any hereditaments means (without prejudice to paragraph 1(1) of Schedule 2) the rateable value shown in the valuation list in force on 1st April 1973 in England and Wales and on 15th May 1971 in Scotland"'.

§ Mr. Rees-Davies
The amendments stand or fall together. The Minister is perhaps in a little difficulty in this debate, one which to some extent I share because it was the former Financial Secretary, now the Minister of Transport, who saw the parties who were affected by the somewhat complex measures with which the amendments deal. It was after that meeting that these matters were discussed in Standing Committee. Unfortunately, at the time that the amendments were to be called, through eventualities which were beyond the control of one of my hon. Friends, they were not moved. Although they were adverted to on Clause 3, they were not fully covered.
That has a certain advantage because it enables us to get across with clarity what is a short but not a wholly easy case to present. As I have been associated with the background to this matter for some time, I am concerned to secure an equitable collection of tax from casinos.
When the tax was introduced it was thought that its yield would be about £1 million. We are happy to say that it yielded £3 million. The Treasury indicated that it would like to ensure a yield of £5 million. I propose to deal with the matter on that basis. Although my 1664 suggestions will cover a wider area than these amendments, I shall be able to show how the Government can achieve their objective, but not quite in the way they propose.
The debate on the 1966 Finance Bill was led by the foremost expert on gambling in the House of Commons. I refer to our much lamented and lost colleague, Iain Macleod. Although I agreed with the line eventually adopted by the Government, the original proposals were wrong. In 1966 the Government changed the basis of the collection of the tax by making a charge on casinos' rateable value. The highest rate charged was over £50,000 while the lowest was under £1,000. According to the table now being considered, the Government have wisely altered that. If the rateable value of the premises does not exceed £1,500 a low rate is charged on each table in the casino. At the highest level, a rateable value of £12,000, the proposed charge for each table is £11,250.
In the 1966 debate it was pointed out that a rateable value was not a satisfactory method of assessment for this form of taxation and that it was necessary to extend the concertina and to widen the bounds of the rateable value. That path is now being followed by the Treasury, which has considerably widened the bounds. Unfortunately it has also imposed an extremely high charge per table on the highest rated casinos to claw in the revenue it needs. A sum in excess of £22,000 per annum per table is self-defeating. It will not be produced.
11 p.m.
At present 12 London gaming clubs with a total of 196 tables are providing £2¼ million revenue. It is proposed that those 12 clubs with the same number of tables should yield £4.410,000—that is to say, over £2 million more. The other clubs in the provinces and elsewhere have to carry none of the increased burden, and some may have a saving.
The assessment assumes that every table is of equivalent value. That is where the lack of expertise in the draftsmanship is shown. In one casino in Shaftesbury Avenue most of the 28 tables have very low stakes which would not yield sufficient profit to pay the very high charge although, the premises being in Shaftesbury Avenue the rateable value is well 1665 in excess of £12,000. It does not follow that in premises with a high rateable value a high charge can be made for additional tables.
It is true that higher charges can be made in areas of some wealth, but where the proposal falls down is that in Shaftesbury Avenue and Tottenham Court Road the stakes are moderate and the casinos would not be able to pay these large sums.
There are likely to be two results. First, the very low stakes will be increased, there will be an undesirable increase in gambling and people will gamble for higher stakes than they wish. Secondly, some of the tables will be withdrawn altogether because the casinos will not be able to make a profit on them. If that happens, the increased yield which the Treasury has in mind from £3 million to £5 million will not be achieved. It will become desirable to have the full complement of tables only in one or two particular casinos.
There are two casinos in the Curzon Street area that have high level gaming. It is true that there are a large number of Arabs in this country and travellers from Japan and overseas, some of whom are high gamblers. Where there are tables at which the limits are extremely high--up to £30,000—and where it is not unknown for people to win or lose in a night in excess of six figures, it is right and proper to charge at least £25,000.
I do not expect a detailed reply from the Minister dealing with the niceties of heavy and excessive gambling. I have had the opportunity of having a long talk with members of the Casino Association and I have from time to time advised them on various aspects—not as an association but as individuals.
The casinos are producing an important yield for the country. I emphasise that it is not just the yield to the Treasury in respect of gambling by foreigners that is important. The tourists are big spenders who in other ways contribute a great deal of money to the general tourist revenue. They represent a small section of wealthy individuals who certainly increase the revenue to the Treasury and to our coffers, quite apart from the gaming in which they take part.
1666 I suggest that these amendments are reasonable and sensible. I do not suggest that in the long term I would not rather have had the opportunity to change them somewhat. I certainly hope that, having been half-converted, and having given this some thought, the Treasury will now give it further thought and come up with a suggestion. If they want £22,000 to become £25,000 for a table they should relate it only to tables where the stakes are above a particular limit.
Having regard to the careful control in this country which is now applied through the admirable efforts of the Gaming Board, the Treasury are now in a position to know, and the Customs and Excise fully know through their inspectors, what are the levels of gaming in each club, and they would be able to achieve real equity, and to see that people who play for higher stakes pay a higher percentage than those on a moderate gamble.
It is right to leave out altogether the top bracket of £12,000, to leave out line 31, for a charge on a table of £11,250, but to provide instead that the charge for each table after the first eight should be one half of the charge shown in the third column. That would enable and encourage them to keep the same number of tables, or even to increase them. Few of them are able to increase them very much, and there is no sign at present of any general overall increase in the money which is to be extracted from those who play in the casinos. There is no longer a boom. Just a few of the foreigners to whom I have adverted play the high game.
It is also important to discourage gambling outside the casinos. At present there is little evidence of illegal gambling on any extensive scale. The introduction of carefully controlled gambling has proved successful in this country and now, with the introduction of the Gaming Board, that is progressing satisfactorily. One does not want to encourage driving it underground. I regret that if there is a reduction in the number of casinos people may try to go elsewhere and capitalise on this.
I invite the Minister to give a sympathetic reply to this matter which has not yet had full and careful consideration. 1667 I hope that the Government will be able to meet this point, watch it carefully over the next year and see whether the arguments put forward tonight are correct. They may well find that the present basis in the Bill might bring a reduction in yield and in the number of tables. That may give an opportunity to consider the suggestion I have made tonight, that they should consider relating the actual charge per table, certainly above a small number, to the stakes.
This is not part of the argument put forward by the Casino Association, but, speaking for myself, I feel that that is the right path to tread. The casinos would not have the advantage of lower taxation—in fact, they would be paying more. The tax would be spread so as to produce an equitable burden. It is hardly equitable for some 80 per cent. or more of the total gambling tax in casinos to be borne by such a small proportion of the total number of casinos.

§ Mr. Denzil Davies
The hon. and learned Member for Thanet, West (Mr. Rees-Davies), as he intimated at the beginning of his remarks, has the advantage of me. The hon. and learned Gentleman has considerable knowledge and expertise in these matters. I, as a good Welsh methodist, have never been seen inside one of these establishments. I omitted to say when discussing the previous amendment that nor have I touched a drop of Scottish whisky. The Treasury is in good hands this evening.
The hon. and learned Gentleman went into this subject in great detail. Perhaps he will agree that the best course would be for me to deal with the amendments briefly but separately and then at the end to indicate my views.
Amendments No. 1 and 2 would delete from the proposals the highest band of £12,000, for which the annual duty charge is to be £22,500 per table. If the amendment were accepted—but we are not disposed to accept it—the highest rateable value band would be £10,500 and the rate per table in that band would be £17,500. The cost of reducing the duty would be £980,000. That very precise figure is not a Treasury figure. It is a figure put forward by the British Casino Association. The Treasury and the 1668 Revenue see no reason to dissent from that figure. We may not be talking about large sums but we are talking about £1 million at a time of great economic difficulty. I do not believe that at this moment we can give away £1 million in this area when there are so many other priorities.
The hon. and learned Gentleman will also realise that the rates of gaming duty have not changed since 1970. We are not adding an additional impost but adjusting the rates in terms of inflation since 1970. I do not consider that the majority of hon. Members or the majority of the public would consider that to be unfair.

§ Mr. Rees-Davies
I entirely accept the Minister's figure, but no doubt he will deal with the point that it is based upon the assumption that the same number of tables will be used. If some of the tables are withdrawn because the burden becomes too heavy the £980,000 will not be obtained.

§ Mr. Davies
On that basis it could be said that there would be a loss, but the figure to which I have referred has been put forward by a trade association and one assumes that it knows its business. Of course, anyone can be wrong on such a matter, but at the moment that is the figure and that is the prognostication.
Amendment No. 3 reduces the charge of duty per table for any table after the eighth in a casino to one-half the flat rate charge proposed in the Bill. The same arguments apply to this amendment. I understand that if we accepted the amendment there would be a loss of revenue of about £1¼ million a year. That figure has been accepted and agreed, I understand, by the British Casino Association.
As regards these amendments, we are talking about £2¼ million. At this moment I do not think we can grant such a concession. I accept, of course, the hon. and learned Gentleman's point that no one can be certain that when indirect taxes are increased the revenue might not fall rather than increase because of the effect of taxation. We shall keep an eye on these matters. However, we do not think that there is a problem. We do not think that there will be a shortfall in revenue. I give the assurance that we shall keep the matter under review. For the moment I do not see 1669 how we can give this concession. The hon. and learned Gentleman will not be surprised to hear me say that we cannot accept the amendment.

§ Mr. Rees-Davies
I appreciate that at this stage the Government do not feel able to accept the amendment, but I hope they will recognise that there may well be a shortfall as a result of a reduction in the number of tables, and particularly in moderate gaming. If they find that there is such a shortfall I hope that they will rapidly ensure that they get back their yield by bearing in mind what has been said tonight, and by considering putting the tax upon those who can bear it.