Finance Minister Brian Cowen announced during his 2006 Budget speech that off-course betting tax in Ireland is to be reduced from two per cent to one per cent with effect from July 1 next year.
Cowen mentioned the increase in internet betting and the importamce of maintaining a level playing field for the different forms of betting and said that he intends examining the potential for widening the tax base on which the one per cent tax will apply in the future as the reduction will cost up to EUR 25 million.
The Minister also added that in his intention “the betting tax of one per cent will be borne by the (bookmaking) industry and not by the customer.”
Paddy Power, Ireland\’s largest bookmaker, announced that they would be stepping ahead of the Minister and would be introducing tax-free betting in all its 150 shops with immediate effect.
“The reduction in the betting tax is the best news for punters since Frankie Dettori won seven races at Ascot, and it is good news for bookmakers too,” said a spokesman for the firm.
“It has been possible to bet tax free for years on the internet and by telephone, but now Minister Cowen has levelled the playing fields so that all betting shop punters are no longer at a disadvantage,” he added.
In separate news, Paddy Power\’s Finance Director Ross Ivers resigned and would leave the company at the end of next month.
Ivers is understood to have quit because he saw no room for personal improvement after Patrick Kennedy was appointed as a successor to the Chief Executive John O\’Reilly with effect from January 2006.
UPDATE: Analysts upgraded profit forecasts for Paddy Power to take account of the cut in off-course betting tax. Goodbody analyst Neil Clifford said he was increasing the 2006 operating profit and earnings forecasts by 5.6% and 5.5% respectively. For 2007 operating profits are expected to rise by 11.2% and earnings by 10.7%.