The United Kingdom has dealt another blow to the gaming sector as Chancellor John Healey decided to increase the Machine Games Duty after all. While the increase is not as dramatic as the online tax hike last year, it adds new burdens to an industry that has already been facing certain challenges.
MGD Increases to 25%
The ongoing gaming reforms and tax hikes in the United Kingdom have taken a toll on the gambling sector, causing multiple operators to scale down their businesses. Pared with rising costs and regulatory pressures, this has led the sector to warn against further tax hikes.
Despite that, Chancellor John Healey’s new budget outlines an increase in the country’s MGD. According to him, the new duty will be 25% (previously 20%). Healey stated that the extra tax funds will provide greater support for high streets. While he vowed to pay for greater support for high street businesses, he said that adult gaming centers and vape shops will be exempt from such relief.
Healey elaborated that the 5% MGD hike will increase the business relief threshold for small businesses from GBP 12,000 to GBP 18,000.
The MGD hike comes shortly after UK MPs petitioned for this increase, citing last year’s online gambling tax hike. In a letter to the chancellor, Alex Ballinger, who chairs the APPG for Gambling Reform, encouraged Healey to consider the tax increase. The letter was backed by some 89 Labour MPs, who supported an increased Category B machine duty.
Ballringer’s proposal encouraged an increase to up to 40%, meaning that Healey’s actual decision is not the worst-case scenario for the gaming sector. Still, the increased pressures are unfortunate news for the industry, especially in light of the fact that stakeholders explicitly warned against further tax hikes.
The Industry Is Not Pleased
Gaming organizations, including the Betting and Gaming Council, previously tried to discourage the government from raising the taxes again, arguing that further hikes would result in shop closures and layoffs.
As a matter of fact, shop closures and layoffs have already been happening as multiple operators in Great Britain have been forced to scale down their businesses due to the continued headwinds.
Gambling industry critics were also somewhat let down by the 5% MGD increase, saying that they doubt that such a small increase would really make a change.
Despite that, the Social Market Foundation praised Healey’s decision, emphasizing that higher-risk verticals should be taxed appropriately.