Budget 2012: Gaming machines tax to cost pub trade £14m

21-Mar-2012 - Last updated on 11-Mar-2017 at 18:04 GMT

Tax on gaming machines in pubs is set to cost the sector £14m in taxes next year, the British Beer and Pub Association (BBPA) has estimated.

It comes after the Chancellor introduced a new 20% tax rate for a new machine games duty (MGD) – set to begin in February 2013.

Currently, pubs pay £905 per year for their gaming machines (category C machines) under the amusement machine licence duty. Skills with prizes (SWP) machines pay no duty.

BBPA chief executive Brigid Simmonds said that this will have a greater negative impact on wet-led pubs, which are already struggling in the current climate. She also warned that SWP machines may disappear from pubs.

Under the new duty regime, the BBPA estimates that licensees may also have to pay £200 administrative costs per year.

Simmonds said: “This is a bitter blow. For this new tax to be revenue neutral it should not have been more than 15%. It will cost the pub sector £14m in extra taxes next year.

“The Government could also have frozen the existing amusement machine licence duty instead of raising it by inflation, given we now have a very difficult transitional year for the pub and machine industries.

“Fruit machines and quiz machines are an important part of the fabric of British pubs, a vital income stream, and valued by customers. For quiz-based machines, this punitive new tax rate could see many of them disappear from pubs.”

Simon Johnson, CEO of Business in Sport and Leisure, agreed: “We believe that this rate is not revenue neutral and threatens to be enormously damaging for the vast majority of gambling operators. The Publican's Morning Advertiser Pub Market Report published last month showed a 2% decline in the number of pubs with AWPs down to 54% and we fear that MGD will hasten that decline further.

“This decision appears to be simply the next step in an ongoing sustained assault on the low stake gambling industry. Instead of looking at how the industry can help the economy grow, politicians have looked at how the industry can help tackle the Government’s deficit problem. Ironically, in the long term this high tax rate will lead to falling revenues for the Treasury."

Kate Nicholls, Strategic Affairs Director, said: “Just like alcohol excise duty, the Chancellor is playing semantics. He said there would be no change in alcohol duty – it has gone up almost 6%. He said the change from Amusement Machine Duty to a gaming machine tax would be ‘fiscally neutral’ – it isn’t. On average, our members will see their tax bill for gaming machines rise by 10% - that’s simply not sustainable”.

The ALMR Annual Benchmarking Report shows that gaming machine income accounts for 2% of turnover across the pub sector as a whole and 4.5% of turnover for community locals.

“Machine takings are a vital income stream for traditional community locals and make a valuable contribution to many operator’s bottom line. This additional tax will simply erode that further and make many unviable in the longer term. We urge an immediate rethink,” Nicholls added.