Peter Miller
TO break down why the Gaming and Betting Tax Amendment Bill, published by the KwaZulu-Natal Legislature for public comment on December 10, 2021, would be counter-productive and imperil tens of thousands of jobs.
At the very pinnacle of the horse racing Industry stand the owners of thoroughbred horses. Owners, in general, are wealthy individuals with sufficient money and ego to purchase a thoroughbred horse to race the horse against horses owned by others of similar ilk.
Owners get their thrills by winning races and winning the stakes paid. Most horses never win at all, let alone win enough to pay the associated costs of buying, training, and running the horse. In truth, owners contribute handsomely to a massive voluntary redistribution of wealth because the majority spend a good deal more than they earn.
Owners need thoroughbred stud farms to breed horses, trainers to train them, jockeys to ride them and grooms to care for their horses. These activities, in turn, require veterinarians, farriers, feed manufacturers and horse transporters, among other services.
But in order to race, owners need racecourse operators who organise and stage race meetings and provide horse training facilities. Racecourse operators need income to meet the costs of staging races, paying stakes, building and maintaining facilities and paying taxes.
This income is generated by the Totalisator betting system, run by the Racing Operator and half of the bookmaker tax (currently 6 percent) paid to the Racing Operator. The latter constitutes the bookmakers' contribution to the costs of staging race meetings. Gold Circle is a good example of such a racing operator.
Incidentally, not so long ago, bookmakers' tax was 12 percent, which was split 75 percent to tax and 25 percent to share of operator’s costs, but this was changed by a sweetheart deal in the mid-1990s.
Any proposal, which seeks to reduce racecourse operators' income, is a direct threat to racing as an industry. If the racecourse operators cannot increase stakes or even, in the worst case, cut stakes and reduce meetings, then the first to negatively respond will be owners.
With reduced owners, racing will diminish and die, and with that, all the jobs that support racing will vanish. Therefore, it is ill-advised to seek to finance transformation by reducing racecourse operators' income, given that all profits are ploughed back into racing.
Transformation will be stillborn if the racing industry in KZN withers and dies. Tens of thousands of jobs will be lost. Transformation can only succeed if the horse racing industry is financially healthy and prosperous and thus attractive to new entrants. Killing the goose that lays the golden egg is counter productive.
Peter Miller is a former MEC for Finance in KwaZulu Natal and a former member of the Gaming and Betting Board.
*The views expressed here are not necessarily those of IOL or of title sites.
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