‘Taxation Sapping Racing’s Vitality’

Press, Volume CVI, Issue 31113, 16 July 1966, Page 7

‘Taxation Sapping Racing’s Vitality’

No undertaking could hope to survive when its vitality was being sapped to the point of impoverishment, Mr G. H. Grigg, the retiring president, reported to the annual meeting of the Racing Conference in Wellington yesterday. He was referring to what he said was the “heavy burden” placed on racing by Government taxation.

“We would be failing in our duty to those whom we represent and to the public, who derive so much pleasure from this greatest of all spectator entertainments, if we did not warn the Government of our plight and of the danger to its own revenue”, said Mr Grigg.

Mr Grigg said that last year the Government harvested almost £6 million in racing tax, an increase on the previous year of some £583,000, mainly accounted for by the issue of 24 additional permits. This year it was estimated racing tax would increase by £lOO,OOO. In his recent Budget, the Minister of Finance (Mr Lake) estimated draining a further £250,000 from racing In 1966-67. “Many of the smaller clubs are at present in extreme financial difficulties because of rising costs and other external factors and are faced with the grim alternatives of either reducing stakes or closing down,” said Mr Grigg. “The stake disbursements of some of these small clubs are actually lower today than they were 10 years ago. If racing is to prosper it is just as important to nurture the small clubs and assist them to maintain a reasonable stake level as it is to have the larger clubs with their higher prizes.” 1964 Submission To try to overcome the problem the Racing and Trotting Conferences sought tax relief from the Government in 1964. Their submission showed that relief of at least £900,000 was required to enable clubs to raise their stakes to the real-money value of those paid in 1950. Last year the Government gave relief to the extent of £98,000 in totalisator rebate and £62,000 in amusement tax, said Mr Grigg. The small clubs received very little benefit from the amusement tax concession and clubs racing on two or more days received only the same totalisator rebate as one-day clubs. While any concession was acceptable, the quantum of Government relief was completely inadequate to effect an ap-

preciable improvement to the dwindling finances of most clubs. To help the smaller clubs, the executive committee, in conjunction with the executive of the Trotting Conference, made further representations last April, again pressing for some tax relief. If successful, the claim, on behalf of all clubs with an oncourse daily turn-over of less than £45,000, would have improved their revenue by £750 a day and in the aggregate would have resulted in a tax easing of £BO,OOO. The request had not been granted. Mr Grigg said that one of the main reasons why racing was not prospering in these days of highly inflated currency was that although totalisator betting was increasing through the off-course agency, on-course tum-overs were remaining fairly static. Last year the on-course turn-over was £25,700,000. This year it was estimated that the figure would be £25,350,000. Although the clubs received a net return of about 6 per cent from on-course investments, their share from the net proceeds of off-course turn-over was only about 3 per cent because of the increased costs of running the T.A.B. owing to night trotting, week-day racing and wage rises. Contributed Nothing At the same time, the Government, which contributed nothing towards the administration or promotion costs of racing, and had to render no service, took 9i per cent from the turn-over in the form of taxation. The combined on and offcourse turn-over for the current season would be in excess of last year’s figure, entirely because of a rise in off-course betting and aided by the extra permits granted a year ago, said Mr Grigg. “From this increased turnover the State will receive an estimated increase of £484,000 in racing taxes, which will

represent a substantial profit on the paltry £98,000 it conceded to clubs in totalisator rebate in 1965.” Mr Grigg said that in pursuance of its policy of providing as wide a service as possible for the public, the T.A.B. ran 77 of its 314 offices at a loss in the year to July 31, 1965. The loss amounted to £59,000. Yet the uneconomic offices handled investments amounting to £2 million, which provided the Government with £190,000 in tax. One did not need to hold a degree in mathematics to appreciate the economic absurdity of such a problem in accountancy. Record Profit “Last year the T.A.8., on a turnover of £36,200,000 disbursed a record profit to the clubs of £1,100,000. This year the estimated off-course turnover is £37,200,000, but because of higher operating costs ... the clubs can expect a reduction of about £lOO,OOO in the annual disbursement of profits. Yet Government taxation will increase from £5,700,000 in 1965 to £5,800,000 in 1966. “The estimate for the 1966-67 season is that offcourse betting will increase to

£38,200,000, on-course turnover will probably decline slightly, but Government taxation, because of the higher T.A.B. handle, will rise to £5,900,000, while the clubs face a decreased payout from the T.A.8.,” said Mr Grigg. He said it seemed opportune to compare the situation in New Zealand with that of Victoria, which pioneered offcourse betting in Australia from New Zealand’s blueprint and with New ZealandArained executives as its key foundation staff. “Racing, as you know, is booming in Melbourne since it began to harvest the surplus from T.A.B. operations with stakes up to £30,000 for the Melbourne Cup and £20,000 for the Caulfield Cup and there is a very good reason for this happy state of affairs,” said Mr Grigg. ‘The taxation on off-course betting in Victoria is 12 per cent, of which the T.A.B. retains 8 per cent and the Government takes 4 per cent. The taxation in New Zealand on off-course wagering is 17.35 per cent, of which the T.A.B. retains 7i per cent and the Government takes 9.85 per cent. “The comparison reveals that State taxation on offcourse betting in New Zealand is more than twice as much as it is in Victoria, a fact which we forcibly commend to our Government for its urgent consideration,” said Mr Grigg.