Is it true that the State Government has increased the tax on tote betting? And by how much has it been increased?
The State has increased betting tax on tote from 10% to 20%
When was this decision taken? When would it come into effect?
The notification is dated 31st March, and the tax will be effective from 1st April 2010. Strangely the Club was not sent an official copy of the notice nor formally intimated. It was handed over to a peon by chance on a visit to Mantralaya on 19th April.
What is the percent increase of tax by the government? Hwo would it affect returns for the punters?
The tax rate has been increased by 100%. In no industry is an increase made by such a whopping percentage at one stroke. The Club was given no opportunity to present its case. The returns to punters would fall dramatically encouraging a diversion of bets to illegal channels to avoid paying such a heavy upfront incidence of tax. In Bangalore, when the Government levied a composite 4% turnover tax, the betting increased exponentially from levels of 25 crore a decade back, to nearly 1000 crore at present. In Maharashtra, the last time the tax was doubled in 1998/9, the turnover dropped 25% in one year. It was reinstated to 10% in 1999.
The club was actually trying to bring down the tax since the past few years, now this actually is a huge setback?
Yes, the Club had repeatedly represented for a reduction in tax to 5%. We also had informal acceptance from the Finance Ministry in the State. Hence, the suddenness and quantum of increase has come like a bolt from the blue and will be hugely detrimental to the sport.
How would it affect the sport i.e. number of punters?
The number of punters may not fall, but the quantum of legal bets will show a gradual decline over the year.
The government needs to change its attitude towards racing it is seen as a gambling den rather than a sport. If it is so bad, why does the government make money from it?
The Club has made great progress in promoting racing as a sport. The RWITC pays the state under myriad taxes and levies over Rs 30 crore per year on income of just about 150 crore. Higher taxes is against the stated policy of the Government at the centre as it can be proved low taxes result in better compliance.
Would the club be formally approaching representatives for a re-think on the decision?
The Club has already made a detailed representation in January. I had meetings with both the Chief Minister and Revenue Minister on the subject and we were reasonably confident of maintaining a status quo on the tax rate. Of course, we now have to start all over again and re-iterate the damage to the sport- loss of revenue to the State and the Club, flow of funds to illegal channels and possible loss of employment to thousands of poor workers who depend on the sport for their daily earnings.
The government continues to hammer nails in the racing coffin, the Bangalore racecourse has been asked to shift, high taxes for Mumbai, is it becoming increasingly difficult to run the sport?
Yes, the sport continues to get step motherly treatment. In Mumbai, the race course is a genuine green lung. The Club maintains two walking tracks, the second of which was set up at huge expense. The Club maintains a public garden open to all. The centre is used for equestrian activities and sports for municipal schools. The Club is a huge contributor to the State. In addition, a modern city as Mumbai needs international standard sporting and recreation facilities. We run the only legalised betting operation in the city professionally and with expertise. It is unfortunate that the State overlooks all of this and we are always under threat in our operations.
How does this tax rate compare to other centres/or even globally?
I believe in the U.K. there is no tax on betting at the course and only the Club is taxed on its profits. The tax in countries such as Hong Kong is very low and which has seen a boom in revenue.
Do you think this would mean added revenues for the government or would it have the opposite effect?
Of course a reduction in tax means more revenue to Government. We don’t have to look far for a comparable model- Bangalore is a shining next door example of what a pragmatic tax policy can do for the sport and the State.
This naturally comes as a huge dampener at the tail end of a good Mumbai season?
I could not agree more. It has been an outstanding season of several highs. We have managed to stage the sport in all its glory but it is difficult to control the external environment, but we will not be lacking in effort to plead our case.
Anything else you wish to say
Only a unified approach within the fraternity can achieve results. Recent going ons where egos and politics is ruling the roost, is a sure formula to self destruct. There are very serious issues confronting the Club. This is my first year as Chairman and it surely has been a baptism by fire. I have a fight on my hands- both internally within the institution and outside from the plethora of arbitrary levies. As always, I am confident that with the support of my Committee, we will deliver and address these hurdles in the best interest of the Club
