The Development of Betting Taxes in Britain
| DOI | http://doi.org/10.1111/j.1467-9299.1972.tb00095.x |
| Date | 01 June 1972 |
| Author | C. HOOD |
| Published date | 01 June 1972 |
The Development
of
Betting Taxes
in
Britain
C.HOOD
Mr.Hood
is
Lecturer in Politics at the University
of
Glasgow.
The
1926
betting tax became a legend
in
the customs, and its failure
is
said to
have been written
on
the Customs' heart.' But a general betting duty was reimposed
in
1966,
six years after 03-course betting
in
licensed shops had been legalized;
and the betting and gaming duties are
now
a
well-established part
of
the revenue
syftem, yielding over ,C;ioom per year.
Betting is commonly thought to be
a
perfect subject for tax either on
sumptuary grounds or on the agnostic principle of
non
olet pecunia.
But
as
an administrative operation,
ad valorem
taxes on transactions require
higuy effective systems of accounting control; and the taxation of betting
transactions presents special difficulties. This is because the commodity
is
intangible, the contract is legally unenforceable (unlike the titles and
contracts covered by stamp duties), and there are no well-defined wholesale
or manufacturing enterprises apart from the retail units,
so
that the
accountability for tax has to fall upon the latter.
Betting tax thus breaks several of the traditional canons of indirect
tax administration in Britain. The normal Excise method
is
to concentrate
narrowly on those parts of the economy from which revenue can most
easily be tapped i.e., minimizing tax evasion by contriving duty points
where physical goods pass through natural or artificial bottlenecks,
preferably at the production stage. Even purchase tax is collected from
only about
65,000
taxpayers, being levied on goods passing from registered
to
unregistered traders (normally at the wholesale stage) and with a cut-off
point for small manufacturers.
VAT,
when it is introduced next year, will change this whole pattern
because it will be levied on over
two
million taxpayers; but at present
betting is the only surviving case of the extension of the Excise machinery
into retail sales taxation in Britain. Indeed, betting tax is perhaps worth
examining in the context
O~VAT
administration in terms of the problem
of
taxing services and small traders, and the difficulties of partial exemption
and discriminatory tax rates. But it remains to
a
large extent a special
case, because,
as
is shown below, all these problems were complicated
'83
PUBLIC ADMINISTRATION
in the case of betting by the general betting laws until
1960;
and this is
the main reason for the sharp contrast between the fiasco of Churchill’s
betting tax in the
1920’s
and the greater successes achieved over the past
six years.
BETTING PRACTICES
BEFORE
1960
Until
1960
cash betting off the racecourses was illegal.
All
bets were
unenforceable at law, though not
illegal,
and it was illegal to ‘resort to
a
place’ for betting. The well-to-do could therefore bet on credit by telephone
or
telegraph without technically ‘resorting to
a
place’, and bookmakers
on racecourses were nominally peripatetic and thus deemed not to be
in a ‘place’.a
On the other hand, cash betting in the
streets
was wholly illegal, though
this was impossible to enforce. The police often took petty bribes (many
bookmakers’ agents paid them for their ‘pitches’) tended to prosecute
on
a
‘rota’ basis and often ‘lost’ records. This, plus the sympathies of many
magistrates, made for ‘turnstile justice’, with maximum penalties rarely
irnpo~ed.~ In Scotland, where Burgh Court fines are paid into local autho-
rity funds (whereas English petty sessions’ fines go to central government),
a
form of ‘licensing’ developed, in which premises were raided annually
by the police* (moneys found in an illegal betting house were forfeit).
In the
1920’s,
many large postal cash betting firms were based in
Scotland, where it was still widely believed (wrongly) to be legal to bet
by post. The other main regional difference in betting methods was that
North of the Midlands illegal betting was largely done in shops; below
the Midlands, by street agents, though illegal betting habits varied from
place to place according to physical characteristics and to the attitudes of
chief constables.6
Clients had to be introduced to agents, who gave no written receipt
for bets (there were usually witnesses) and who were often served by
‘watchers’ or look-outs. Bookmakers received the incoming betting slips
via
runners, trying to arrange alternative inlets in case of one inlet being
blocked by the police. The payout often took place in offices, since it
was not illegal to
settle
bets in offices.
MR.CHURCHILL’S BETTING TAX’
The betting tax was one
of
the lesser-known disasters of Winston Churchill’s
Chancellorship
(1925-9).
The idea
of
a
betting tax dated back to the
1870’s~
but it was politically awkward because at that time off-course
cash betting was illegal. The Customs insisted that an effective tax would
require off-course cash betting to be made legal in licensed betting shops,
but this was opposed by the Home Office, by the Free Churches and by
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