RACING TAXATION

Manawatu Standard, Volume XLVII, Issue 75, 25 February 1927, Page 2

RACING TAXATION

BURDEN UPON CLUBS. DEPUTATION TO MINISTER. The New Zealand Country Racing Clubs’ Association has been for some time past actively engaged in connection with the present burden of taxation of racing clubs which is particularly affecting the status of most country clubs. Recently the executive of the association waited upon the Minister of Internal Affairs when the president placed the following details before the Minister:—

AN UNDUE BURDEN. “The timo has arrived for a very serious study of the burden the present taxation is upon racing and trotting clubs alike. It might be said at the outset that the sport in both insances is very popular, and that in the main is carried on by bands of honorary officials who are associated with the sport for sport’s sake. But their membership entails burdens nowadays in that very few clubs are without large debts. These have to be underwritten by the members either in bank guarantees or through security given over debentures. In some instances individual members have advanced large sums of money without interest to enable their club to keep afloat. The position of many clubs is now very acute, and calls for redress. Representations in these matters are not new. Year after year the official reply is in the same tenor — sympathetic, but without practical results. We do not know that this state of affairs can continue much longer. The tale of falling revenue is a very common one, and many clubs both great and small, are in very deep water financially. It is a fact, too, that, despite guaranteed overdrafts, the banks are pressing for a reduction of the limit, and the curtailment is going to embarrass several clubs very seriously. Were the situation to be stressed for a week it could not be made more plain or definite than the simple statement that matters have reached such a pass now that relief must be afforded quickly or the flourishing conditions of the sport will be in serious jeopardy. The decline or fall of the sport would be a serious matter with far reaching effect. Chief of all, the standard of the sport would suffer. The conduct of the sport in this Dominion is creditable from every point of view, and it would be a poor acknowledgement of what has been done to build up the sport to the standard it now has attained to allow it to drift backward and lose its wholesomeness.

A couple of months ago a writer in the Referee gave a resume as follows of racing taxation by the Government of late years:— ' 1910: Totalisator tax increased from I,] per cent to 2J per cent. Two and a half per cent receipts tax imposed upon the receipts of racing and trotting clubs, which include gate money, sale of race cards, booths, luncheons, etc.

1915: One per cent tax imposed upon stakes to cover oweners’ income tax. Two and a half per cent tax imposed upon dividends. 1916: Income tax imposed upon clubs. 1917: Amusement tax (admissions and gate money already taxed to the extent of 2i per cent by the receipts tax imposed in 1910). 1921: Dividend tax increased from 2£ per cent to 5 per cent, stakes tax increased from 1 per cent to 10 per cent. Fractions claimed by the Government, but repealed after one year. 1923: Income tax repealed. 1924: Stakes tax reduced from 10 per cent to 5 per cent, although when this tax was increased in 1921 from 1 per cent to 10 per cent it was on the distinct understanding that the increase was to be for two years only. 1925: One and a quarter per cent refund on totalisator investments up to £20,000, but not exceeding £250 in any one case, provided the refund is spent on permanent improvements. LUCRATIVE SOURCE OF REVENUE

This, it will be admitted, is a formidable list of discouraging burdens for clubs, but a very lucrative source of revenue for the Government, which, in the season 1924-25, received in taxation £486,205 15s 9d, and in 1925-26, £466,266 Os 3d. Some particulars which were obtained a while ago showed that in March, 1924, the racing and hunt clubs of the Dominion (not including trotting clubs) had total liabilities amounting to £554,424 7s 6d, so that in the year 1924-25 the taxation paid was only some £78,219 short of the whole liabilities of the clubs. These figures speak for themselves, and redress is urgently needed if clubs are to carry on successfully. Further on this subject of racing taxation, it was published through the press that on November 22 last the New Zealand Sports Protection League wrote to the Hon. W. Downie Stewart, Minister of Finance, stating that the league had on several occasions represented to the Government that the excessive rates of taxation imposed on totalisator investments and dividends was having the, effect of crippling the clubs, encouraging illegal betting, and causing a steady decrease in the State revenue, and it instanced the results of the Christchurch spring carnival (details of which were published recently) in support of its case. It was pointed out that investments had steadily decreased since 1921, when the dividend tax was increased from 6d to Is, and other increases imposed. Racing and trotting clubs, it was stated, provided the easiest of all means of collecting State' revenue, but it was not necessary for the Government to give them more encouragement than they were receiving at present if they were to continue to be such excellent tax collectors. ' It was also clear, said the league, that the present restrictive legislation, which gave the bookmaker a practical monopoly of all business outside the precincts of the course, was a great disadvantage to both the State and the clubs. The matter was brought before the Government with a view to legislation being introduced to modify the rate of taxation, and to remove the present restrictions which so favoured illegal methods. Here is another note from the Referee of November last giving particu-lars-of a case at Levin which is typical of many other places in New Zealand. The sporting writer referred to the Levin meeting said: “Beautiful spring weather, an attractive card, and a really good attendance, including the Speaker of tlie House of Representatives and three Ministers of the Crown, were not sufficient to save the Levin Racing Club on Saturday from being involved in the general decline in the totalisator business. The investments on the machine compared with those of last year’s meeting declined by £IOOS —from £19,578 to £18,573 —when all the circumstances, save the tax collector’s insatiable greed, should have made for a substantial increase. The handicapper did his part by producing some great finishes between well-backed horses, and winding up with a sequence of a head, another head, and a deadheat. But backers are tiring of paying , 20 per cent for the privilege of risking

their own money, and it is not surprising that more and more of them are turning a less critical eye towards the übiquitous bookmaker.” Many other quotations of a similar character could now be given, but it is felt that Ministers must have realised how the drift has set in, and what a struggle it is for many of the clubs to stem the advance tide.

RELIEF SOUGHT. As regards assistance, relief is sought by way. of greater assistance under legislation for clubs, owners and the public. Clubs.—The maximum of the refund on totalisator investments should be increased to £SOO, the refund to cover maintenance in addition to permanent improvements, and also payments for interest on loans.

Owners. —(a) Stakes tax to be reduced to 2\ per cent; , (b) railway churges one way only, and owners to be relieved of the present cumbersome system of obtaining refunds on the return journey. Public.—Dividend tax to be reduced to 2J per cent. Clubs would be helped further by granting facilities to forward money to clubs for investment on the totalisator; by granting permission to introduce the double totalisator where desired; by permitting the publication of dividends in the newspapers. • It is a notorious fact that illicit betting is going on daily and the postal service, telegraph office and telephone system are used extensively for that purpose. Bookmakers, their agents and their clients may thus use the public service illegitimately to the detriment of club revenue and Government income but the clubs may not use the same service in a legitimate way. There are very few corners in the Dominion where results and dividends are not known within a short time of the result of important events,enterprise of the law breakers which shows how extensive is the illicit betting which is going on. The suspension of the amusement tax for racecourse admissions and particularly on members subscriptions is desired also. Clubs are taxed already on admissions to the extent of 2£ per cent, and the amusement tax is a second imposition on the same money, while members’ subscriptions which are levied largely to cover overhead expenses in club management should be free of taxation, as without efficient managment clubs must suffer. The debenture tax is another impost on racing clubs, several of which owing to the lack of landed, security have to offer a high rate of interest to attract necessary money. The money is used £or improvements the better to equip courses to cater for advanced sport, from which in turn by increased conveniences and comfort to owners and patrons. Club receipts are enlarged, and the Government derives direct beenfit from such expenditure with borrowed money. The pressing needs of the times alone justifies this extended reference to the matter and the requests herein made. But the need for substantial relief is urgent and immediately necessary. Ordinary business folk who have little or no interest in racing are helping many small local clubs in the interests merely of the community. It is not fair to saddle private individuals in this way when large sums are taken from the sport which contributes already very largely to the public treasury by way of post and telegraph services, railway receipts for pasengors and goods traffic and the general income derivable from the trade and intercourse created in any and all centres where meetings are held. With all this in mind and again recaling the very pressing needs of the moment, relief along the lines herein indicated is urgently pressed for and the country racings clubs of the Dominion are entirely, behind the Executive in this appeal. MINISTER FAVOURABLE. The Hon. Minister, in reply, was both cordial and favourable, and the deputation retired with the impression that in Mr Bolard the country clubs have a good friend. In the course of iiis remarks Mr Boilalrd intimated that, in regard to the annual rebate of the totalisator tax to clubs, claims on account of certain maintenance payments and interest payments to past improvements would be allowed—a very important concession to many clubs. The reduction of the stakes tax was in the hands of the House, where it was most likely to be considered again, though previously members had apposed any reduction.

Regarding theßividen tax the money received was earmarked specially for reduction of the war debt, and went for that specific purpose. These were matters of finance both outside his sphere of decision, though it was competent for the Minister to make recommendations on the points.

The question of using the telegraph for forwarding money to racecourses, the reintroduction of the double totalisator, and the publication of dividends in the newspapers were matters likely to come forward from the Upper House next session.

With the uses to which wireless broadcasting were put it was probably necessary that the publicity side of the matters referred to should be considered.

As regards railway charges for racehorses, this was a subject outside his department, but cases had arisen lately which had been the subject of comment, and he understood on the return of the Rt. Hon. the Prime Minister, who is Minister of Railways also, that an influential deputation was to wait on Mr Coates, to have the subject of transport and charges reviewed, and no doubt the deputation would be heard in due course. Mr Bollard concluded by reiterating his friendliness towards the country clubs, and thanks were extended to the Hon. Minister for his proimses to help and for his disposition generally to do what he could for the advancement of the sport.