From New York Times – Gibraltar, the British territory at the tip of the Iberian Peninsula, has long been a political sore point between Britain and Spain. But now, in an Internet gambling dispute, it’s Briton vs. Briton.
Officials and executives in the territory’s thriving online gambling industry are crying foul over Prime Minister David Cameron’s plan to impose a 15 percent tax on residents of Britain who place bets on Gibraltar’s dozens of sites.
People here in this tiny outpost, which evokes England with its red phone booths and helmeted police officers, see the proposed tax as an unfair revenue grab by the London government. While Britain is responsible for the territory’s military and international relations, Gibraltar has significant autonomy over trade and industry issues, including the ability to set taxes. What Gibraltar cannot necessarily control is taxes that London imposes on Britons in Britain.
The tax would be “clearly against the common-sense logic of electronic commerce,” said Phill Brear, Gibraltar’s gambling commissioner. He said that about 60 percent of online bets by Britons were placed through Gibraltar sites. “We now hear a lot of talk in the U.K. about creating a level playing field. But you can in fact never level the field between high-street shops and online services.”
The proposed 15 percent tax, the same as that imposed on Britons who bet within Britain, would be a sharp markup from the 1 percent that Gibraltar currently levies. The plan, which Mr. Cameron wants to take effect by December 2014, would also make it compulsory for Gibraltar-based companies to have a British license to serve British clients.
Companies would thus face the same rules as betting-shop operators back in Britain, like William Hill and Ladbrokes. But William Hill and Ladbrokes are also active in Gibraltar’s online wagering industry, meaning they would get ensnared by the new tax.
The change would put “a huge and unwanted cost on our business,” said Steve Buchanan, who heads the Gibraltar operations of Ladbrokes.
Mr. Buchanan added that Gibraltar had other advantages, even if the new gambling tax were adopted. He noted that Gibraltar applied no value-added taxation on advertising and other activities essential to the gambling sector, unlike the 20 percent tax levied in Britain. When Betfair, another British operator, announced its move to Gibraltar in 2011, it said it would save £20 million, or $30 million, annually in taxes.
