HORSE racing in the state may soon be extinct. The sport that was already reeling under heavy levies was delivered yet another body blow by the state revenue department this month when the betting tax was doubled from 10 to 20%. Ostensibly, the state government has taken this step hoping to boost their income. But the move clearly shows the revenue department and its advisors have not done their homework properly.
All over the world, any government's income from horse racing has been inversely proportional to the level of betting tax- lower the tax, higher the income; and higher the tax, lower the income.
The most shining example has been that of Hong Kong where low level of betting tax ensured that the government got a revenue of HK$ 8.12 billion last year, besides which the Hong Kong Jockey Club (HKJC) paid another HK$ 707 million to charitable trusts.
With only 78 days of racing in a year, Hong Kong racing generates a turnover of over HK$ 108 billion thanks to charging one of lowest tax rates in the world ( 7.5% only). In our own backyard, there is another striking case of the Bangalore Turf Club ( BTC) which saw its coffers overflowing when the Karnataka state government in the 1994 allowed them to charge only 5.5% betting tax.
Within five years, the betting turnover zoomed from merely 12 crore to over 1,000 crore. The BTC is today India's strongest tote center and Karnataka government is a deserving beneficiary.
The hike in betting tax is a guaranteed to be a lose- lose situation for both the Royal Western India Turf Club ( RWITC) and the state government. With the proposed 20% betting tax, even if the RWITC continues to charge the same 6% commission that it presently does, the Tote tax level will rise to 26%. By this ill- thought out move, the state government is throwing only two options to the hitherto honest Tote punter: ( and bet on tote and pay 26% tax even on a losing bet) or be a cheat ( bet with an illegal bookie and don't pay a penny as tax either on the bet or on the winnings).
