Taxation is never a fun topic for anyone to discuss—unless you work for HMRC, maybe. There’s a perpetual tug of war in iGaming between those who want to implement stiff regulation and taxation and those in the industry who argue that it stimulates the economy, creates jobs, and is not an industry that should be overly taxed or regulated.
As always, the answer to these arguments is somewhere in the middle. Like any service that can cause social harm, a balance must be struck between fair legislation, appropriate taxation, and ensuring the money collected rotates back into projects that can make a difference in the community.
The rise of iGaming in the UK
As the tech giants of the early 21st century started to assert their dominance in the global economy – the UK couldn’t genuinely boast that it had a world-leading industry aside from finance. This was until the 2005 Gambling Act, which became the first legislation to appropriately identify, regulate, and tax online gambling companies that were beginning to make considerable profits in the early days of the digital revolution.
Fast-forward a couple of decades, and the internet is now awash with different casinos. It’s become such an enormous market that casino gaming experts and those with multi-year experience in the industry have been able to reposition themselves as voices of authority in the market. CasinoTopsOnline is one brand that makes it their mission to provide reviews for all different, important characteristics of casino gaming and employ their reviewers to leverage their expertise and rate brands accordingly. Some of these elements include the quality of casino bonuses, site security, reputation within the iGaming community, etc.
Information collated by Statista projects that the UK iGaming market will be worth over $16 billion within five years. Clearly, this is a gigantic potential tax base, with a fraction of this being able to transform communities and fund countless community projects. However, can increasing the tax further on this industry alone result in a growth in community projects?
Downsides of iGaming tax increases
Just like any multi-billion dollar business that operates online, its operations span a multitude of continents. In truth, it can choose anywhere to set itself up for tax purposes. This poses a massive issue for those looking to tax this business in the UK.
Some of the most prominent iGaming companies, especially sports betting sites, are situated in the UK. Given that they are so integral and already pay a tremendous amount of tax, any potential rate increase could cause them to downsize, ship jobs overseas, or move their HQ to tax-friendly jurisdictions such as the Caymans, Malta, the Channel Islands, Cyprus, etc. They hold the cards, so to speak, no pun intended.
So, while they wouldn’t pack up shop and move overseas, they could exert enough pressure via other avenues to offset the net benefit of taxing them. This isn’t how it should be, but it is; it’s a common talking point with Starbucks, but it applies to all multinational corporate giants.
While it is not illegal, business experts and many people question its morality, especially if taxation is being rotated into community projects. This is the biggest downside of raising taxes on multi-national billion-dollar businesses.
Now that new multi-trillion dollar tech companies are starting to pose the same questions, with Nvidia recently surpassing Apple as the world’s most valuable company, the UK must find the right balance. They want to encourage these companies to set up shop here but also want them to pay a suitable amount.
Can it work?
You only have to see how the mere suggestions of an incremental tax increase can cause an uproar in the UK. More often than not, these outcries come from wealthy entrepreneurs and business leaders who are admonishing the government at the mere idea of having them pay more tax on their sizeable earnings.
Another argument is that problem gambling does cause social harm; that’s an unequivocal fact. For the small percentage of gamblers who develop an issue, this can harm them, their families and their broader community simultaneously.
Community projects drill into the core of what can exacerbate these issues. Suppose companies are profiting from it and not giving back to the community. In that case, taxation is the only surefire way to ensure that some of their profits are rotated back into projects that can make a difference.
Paying their fair share
While many of these companies will talk about the benefits of philanthropy and how they are willing to invest in the communities in which they operate, the harsh truth is that many of them don’t.
Taxation, as long as it is appropriately allocated, ensures that it goes to these communities to fund local projects, whether it’s community counselling, providing classes on how to budget, or giving citizens advice for those who can’t afford proper legal or financial information.
With many issues in the UK driving up taxes and the cost of living, more people are starting to believe that the ultra-rich companies and individuals, those who are worth billions of dollars, should put their hands into their pockets a bit deeper to ensure that the communities that they rely on so much for their custom are not swept under by their esurient approach to hoarding as much of their money as possible.
Final Say
As we have touched on, though, this is much easier in practice than in reality. These companies have the luxury and the flexibility to essentially move their business elsewhere if they believe they are being taxed too much.
