Horse racing punters to get further squeezed by Victorian Government POCT tax rise
The Andrews Labour Government has recently revealed its plans to raise the point of consumption tax paid by betting companies, which is expected to bring significant changes to the Victorian horse racing industry.
The proposed action seeks to establish a more equitable system for Victoria’s betting taxes, while also creating a foundation for the sector’s continued viability.
Yesterday, legislation was introduced to Parliament announcing an increase in the Point of Consumption Tax (POCT) from 10% to 15% of net wagering revenue.
Starting July 1, 2024, the state will implement a change that will bring its rates in line with those already established for wagering and betting activity in New South Wales, Western Australia, South Australia, and Tasmania.
According to reports, the majority of the increase in taxes will be allocated to the racing industry, despite only receiving 50% of the 15% POCT.
The remaining 7.5% balance from the POCT distribution will be allocated to the Hospitals and Charities Fund, according to sources.
As of January 2019, Victoria has implemented a new Point of Consumption Tax (POCT) which has replaced the previous “place of supply” tax.
The implementation of Point of Consumption Tax (POCT) in Victoria is a measure taken to ensure that betting and wagering companies operating in the state pay their due share of taxes, regardless of where their headquarters are located.
Victoria’s decision to adjust its tax system for betting is a response to the evolving digital betting industry. The move is intended to create a more cohesive tax system in the state.
The implementation of POCT has not yielded favourable results as it has only led to a rise in racing market percentages from 115% to 130%. This, in turn, has caused a decline in returns and diminished value for punters.
The “no less favourable” requirement for wagering and betting licence holders has been removed by the Victorian Government, according to recent reports.
Under the previous licence, licence holders were required to establish agreements with the racing industry that were at least as favourable as those in place.
Due to changes in gambling habits, the betting market has shifted, making it necessary to amend the current licence. This amendment will allow for the issuance of a new licence when the current one expires in August 2024.
Industry and government officials have collaborated to propose a new funding framework that involves wagering and betting taxes, as the State Wagering and Betting Licence (Tabcorp) is scheduled to expire in August 2024.
As per the Victorian Government, the framework has been designed to offer a sustainable future to the industry by providing long-term certainty.
The Victorian racing industry is a significant contributor to the state’s economy, with an annual economic activity of $4.7 billion and providing employment to over 35,000 full-time equivalent workers.
The racing industry in Regional Victoria is thriving, with a staggering number of over 100 clubs and 70,000 participants showing their unwavering support for the sport.
The region benefits from a substantial economic value of $2.45 billion each year, thanks to this particular sector.
According to the Minister for Racing, Anthony Carbines, the racing industry holds significant value in both the economic and cultural aspects of our state. The industry’s ongoing success is our top priority, and we remain steadfast in our commitment to supporting it.”
The changes implemented will provide the industry with a sense of long-term stability, guaranteeing that its funding will be derived solely from the wagering generated by its product.
The initiative is expected to provide a boost to the industry, creating job opportunities and supporting events that generate millions of dollars annually for communities throughout the state.
The Victorian Government has defended its decision to increase the point of consumption tax (POCT), stating that it brings the state in line with other jurisdictions and secures a prosperous future for the racing industry.
It remains to be seen whether the customers will concur.