Labour MPs Want to Raise the UK’s Gaming Taxes and Revoke the Two-Child Benefit Cap

Dozens of Labour MPs in the UK have expressed support for an increase in the gambling taxes in order to generate extra funding for child benefits. Spearheaded by ex-chancellor Gordon Brown, the initiative hopes to lead to the revocation of the two-child benefit cap.

Almost Half of the Labor Backbenchers Backed the Proposal

ITV, which broke the news on the matter, said that a total of 101 Labour MPs, as well as Alex Ballinger and Beccy Cooper of the All-Party Parliamentary Group, have backed a tax hike on gambling in order to generate funding to abolish the two-child benefit limit. This represents roughly half of the Labour Party’s 235 backbenchers.

One of the main arguments of this measure’s proponents was the gambling industry’s explosive growth, despite the fact that it “brings little value to the UK economy.” Backers of a tax hike argued that gambling companies usually have smaller workforces and that many are based in foreign markets in order to minimize the taxes they pay in the UK.

In a letter addressed to chancellor Rachel Reeves, proponents cited recommendations from the Institute for Public Policy Research (IPPR), which propose increasing the UK’s tax on online slots, poker, and bingo from 21% to 50%, as well as an increase of the machine games duty on cash-prize slots and general betting duty on sports betting to 50% (from 20%) and 30% (from 15%), respectively.

In short, the proposal encourages more than doubling Great Britain’s gaming taxes in order to generate what the IPPR estimates will be an additional GBP 3.2 billion ($4.3 billion) in tax revenue.

Supporters argued that this extra funding will allow the country to remove not only the two-child benefit cap, but the household benefit cap too. These changes have the potential to lift half a million children out of poverty, backers argued.

Tax Changes Are “on the Table”

In the letter to Reeves, Ballinger argued that “no child should be growing up in poverty while gambling companies continue to enjoy profits.” Ballinger also cited the problem of gambling harm, which costs the UK some GBP 1 billion a year.

Reeves spoke to ITV, suggesting that the proposed changes are “on the table.” In fact, Reeves said that she “didn’t need MPs or former chancellors to tell her to launch an enquiry into gambling taxation,” and that she had already set out plans for this in her budget on November 26.

Reeves previously proposed aligning the UK’s gambling tax and creating a single, unified rate. This proposal has been firmly rejected by a variety of industry stakeholders, with the British Horseracing Authority saying that it would harm one of Britain’s most popular sports.

In the meantime, the Betting and Gaming Council (BGC) continues to oppose any proposals to increase the country’s gambling taxes, arguing that such measures would cause more harm than good. Among other things, raising the taxes would undermine the legal market, empower the black market and lead to potential job cuts.