GEP Research Paper 01/21
A Policy Response to the E-Commerce Revolution: The Case of Betting Taxation
D. Paton, D. Siegel and L. Vaughan Williams
This paper was subsequently published in the Economic Journal, Vol.112 (480), pp.296-314.
Abstract
A series of environmental changes in the 1990s, including the introduction of a national lottery, a reduction of trade barriers within the European Union, and the rise of Internet gambling, induced the U.K. government to initiate a large-scale review of the betting duty. As a result of this review, the U.K. government recently announced a significant reduction in the overall level of taxation on betting. It was also announced that the current general betting duty (GBD), levied as a proportion of betting stakes, will be replaced by a gross profits tax (GPT), based on the net revenue of bookmakers. We examine the economic rationale behind this decision and demonstrate how this policy initiative has broad implications regarding optimal levels of taxation for other sources of government revenue.
Issued in August 2001.
This paper is available in PDF format.