UK finance minister Rachel Reeves suggested that a potential hike in gambling taxes could be in the works, providing the necessary funds for the long-delayed revision of child benefits by the Labour government. Notably, the envisioned changes will not affect the horse racing sector, which recently rallied against what they describe as an unsustainable tax burden.
The Extra Funds Could Go Towards Reducing Child Poverty
Speaking to ITV News on Monday, Reeves noted that gambling firms should be able to pay more. Her comments came as Prime Minister Keir Starmer prepared to address the Labour Party’s annual conference. With child poverty remaining one of the party’s most divisive internal debates, a gambling tax hike could help the government introduce the necessary reforms to move on from the current outdated support model.
The Institute for Public Policy Research (IPPR) recently calculated that raising taxes on certain types of wagering could net the government an additional £3.2 billion ($4.3 billion) every year. The think tank argued that such revenue would be sufficient to eliminate the two-child benefit cap nd lift approximately 500,000 children out of poverty.
“Gambling firms make an important contribution to the economy, but they should pay their fair share of taxes, and we’ll make sure that that happens.”
Rachel Reeves, UK finance minister
The IPPR proposed raising the duty on online casinos from 21% to 50%, boosting the levy on slots and gaming machines from 20% to 50%, and hiking taxes on non-racing sports bets from 15% to 25%. Proponents of the plan argue that the gambling sector has grown significantly in recent years and is now well-positioned to carry an increased tax burden.
Any Tax Increases Must Be Carefully Calculated
While Reeves did not explicitly state that the government was considering IPPR’s figures, she did not rule out a similar approach. In a recent Bloomberg interview, she expressed her commitment to fighting child poverty. However, she tempered expectations by adding that any policy changes would require a stable source of funding. One that gambling taxes could potentially provide.
“I want children from all backgrounds to have a good start in life. Would I like to do more? Yes, but of course, we have always got to explain how policies will be paid for.”
Rachel Reeves, UK finance minister
These ongoing debates coincide with growing unrest in the horse racing sector, which has been reeling under increased levies. On 10 September, for the first time in history, all scheduled racing fixtures were suspended as a form of protest. Industry leaders announced they would launch a major campaign in Westminster, highlighting the financial perils posed by further tax hikes to a sector valued at £4.1 billion ($5.51 billion).
With Reeves’ comments setting the tone for the UK government’s future financial policy, pressure is mounting on the government to balance its promise to ease child poverty with the economic realities of a gambling industry already bracing for change. Any gambling tax hike must carefully account for evolving market trends, ensuring that licensed operators remain competitive with unregulated platforms.