Sport: Tax Revenues (Hansard, 9 May 1991)

§ Lord Hesketh
My Lords, I regret that neither the Inland Revenue nor the Customs and Excise keep figures of tax raised from sport.

§ Lord Dean of Beswick
My Lords, I find that Answer disheartening, bearing in mind that the last set of figures produced on the subject by the Henley research centre in 1984 showed that the income was £2.8 billion. Does the Minister not agree that by now that sum will have substantially increased? Will the Government therefore look more generously upon ploughing back some of the money to assist sport at the bottom level and to increase facilities for schools which are sadly in need of them?

§ Lord Hesketh
My Lords, I fear that the question of the noble Lord, Lord Dean, is more suited to a debate than to a short reply from this Dispatch Box. There are deep complications. It is worth remembering that of the ever-increasing amount of money involved in sport a large part comes from commercial sponsorship and commercial endeavours undertaken by clubs to their financial benefit. If the noble Lord is suggesting that there should be a reduction in VAT, which 1203 represents a substantial part of the tax he is discussing, I suspect that he would not be surprised if the Treasury took a rather dim view of the proposal.

§ Lord Peston
My Lords, I appreciate that this is a difficult matter. It is difficult to define what one might call the sports industries and in this case to define what we mean by taxation. However, is the Minister saying that no one knows anything about the matter? Perhaps he can tell me the relevant department. Is it the Department of Trade and Industry, the Treasury or the Department of Education and Science? I raise the question because people involved in sport have the impression that they are disproportionately taxed relative to other industries and on the basis of international comparisons. I certainly do not know the answer to the question. Is the Minister telling us that he does not know either and that literally no one knows the answer?

§ Lord Hesketh
My Lords, there are aspects of this taxation that can be defined. The levy on gambling is a clearly identifiable example. However, when one is talking about licensed bars which are operated within sports clubs it is hard to separate out the revenue the Government raise through the tax that is levied on alcohol, through VAT or through the uniform business rate.

§ Lord Mellish
My Lords, the Minister must surely know what tax is levied for example on the betting industry. The Government know what tax they levy and the amount of VAT that is levied. They also know of the appalling difficulties that the racing industry is experiencing. Is it not therefore time that something was done to help that industry?

§ Lord Hesketh
My Lords, with respect, my reply to the previous question answered exactly the point that has just been made. The Government certainly do know the amount of tax that is levied in the form of betting duty. In that context it is worth remembering that the duty on the football pools was cut from 42.5 per cent. to 40 per cent. to help football.

Lord Winstanley
My Lords, does the noble Lord accept that comparisons between support for sport in this country and support in other European countries are not valid because in Europe local government gives massive support to sport whereas in this country local government does not have any money to support anything?

§ Lord Hesketh
My Lords, that is an interesting point. It is also interesting to note the number of sports where the British do demonstrably better than our European rivals without that form of support.

§ The Earl of Onslow
My Lords, is my noble friend aware that some local authorities offer a lot of support to sport? Guildford is in the process of building a super new sports centre. If statistics are to be compiled on taxation of sport, presumably they will include such things as the VAT that is levied on farriers for shoeing hunting horses, hunt subscription VAT, VAT 1204 on cartridges and taxes levied on all the sports which receive no subsidy from the Government. Long may that situation remain.

§ Lord Hesketh
My Lords, my noble friend is entirely correct. The key to success in sport is talent not taxation.

§ Lord Peston
My Lords, I agree, of course, with the noble Earl, Lord Onslow, that VAT on shoeing horses is the central sporting issue that confronts the nation at the present time. However, the matter I am trying to probe—this is my final attempt—is that I assume the sporting authorities complain to Ministers about what is going on. Am I to understand that all Ministers can offer in reply is to say they know nothing about the taxation of sport and therefore they cannot say whether sporting authorities are more or less highly taxed than they should be or are more highly taxed than sporting authorities in other nations? What do Ministers say in these situations?

§ Lord Hesketh
My Lords, we know about the areas where there is a straight levy, for example, gambling. The difficulty with VAT is that many more inspectors would be required if we were to search the highways and byways of sport to define what is a sporting activity on which tax is levied in the context of a licensed bar and what is not a sporting activity in the context of a licensed bar. I am sure that the noble Lord, Lord Peston, would not be in favour of incurring vast expenditure to ascertain that information.

§ Lord Dean of Beswick
My Lords, the Minister has not answered my Question. I am not disputing what is being collected in the form of taxation. I asked for more sympathetic consideration for people at the bottom end of the scale. Is the Minister aware that the target of the British Olympic Association for the four years leading up to 1992 is £5 million, and that that will be subject to a tax of between £1.5 million and £1.8 million? Our rival competitors in Europe will not face such a tax. Will the Minister consider the case of the British Olympic Association and give some sympathetic consideration to ameliorating the tremendous burden it has to carry?

§ Lord Hesketh
My Lords, if the noble Lord wishes to put down a specific Question with regard to the British Olympic Association—I assume he will also relate the Question to Manchester—I would be more than happy to answer it.