The UK government this week faced calls to evaluate the economic impact of gambling duty increases on Gibraltar, after a Labour MP expressed concerns that the tax hikes may disproportionately affect the peninsular’s economy.
Gareth Snell, MP for Stoke-on-Trent Central, proposed an amendment to the Finance Bill, to include an impact assessment of UK Remote Gaming Duty rising to 40%, and Remote Betting Duty to 25%, during the bill’s third reading in the Commons on Wednesday.
The amendment called for the government to publish the assessment by 1 April 2027, specifically addressing sections 83 and 84 of the Act and their effects on Gibraltar’s economy.
Snell told MPs: “One third of Gibraltar’s tax receipts come from the [gambling] sector, so anything we do in this place that has an impact on the sector there – I entirely accept that this is not an intended consequence of the decision – would leave a huge hole in its economy, and that will have to be filled.”
Gibraltar’s economic pillar
Since the tax hikes were announced during the autumn budget in November, Gibraltar’s Minister for Justice, Trade and Industry Nigel Feetham has been very vocal about how damaging the measure could be for its own sector, but also wider public revenues.
Feetham said in a statement on 1 December: “This is an issue of vital importance to Gibraltar and one that may directly and indirectly affect our public revenues.” He further noted that the UK gambling tax rises are “a tax on revenue, not profit” and that modelling suggests the effective tax rate “will increase to between 80% and 100%”.
Gibraltar employs around 3,500 people directly, according to figures cited in the parliamentary debate. The territory’s gambling sector also generates roughly one-third of its tax revenue.
Snell highlighted that Gibraltar collects taxes on operators’ gross turnover and reducing that turnover, or changing how UK customers bet, could sharply reduce Gibraltar’s tax base. The MP warned this shortfall could run into tens or even hundreds of millions of pounds.
Black market impact ‘overblown’
Snell also called for a similar impact assessment of the black market, and how much the gambling tax increases could impact this in the UK.
However the black market impact was downplayed by MP for Halesowen, Alex Ballinger, who said it was common for “industries associated with harm [to] use the black market as an excuse to avoid regulation or additional taxation”.
“In the gambling sector, the threat of the black market is overblown. The regulated market is dominant, and in recent years there have been lots of taxation changes that have not increased the size of the black market,” he added He cited examples from a 2021 Gambling Commission study which “found that only a very small proportion of UK gamblers ever used unlicensed sites”.
Chipping Barnet MP Dan Tomlinson said the government would ultimately not make further changes to the bill, but would “monitor the impact of the change” and continue to engage with ministers in Gibraltar.
