Ed Davey: Tax the gambling industry to solve the NHS crisis

Mark’s Monday press release round-up covered this story:

Liberal Democrat Leader Ed Davey is today announcing proposals for a new Carer’s Minimum Wage, to tackle the huge staff shortages in the social care sector. Under the Liberal Democrat plans, social care workers would be paid at least £2 an hour more than the current minimum wage, bringing their pay up to at least £11.50 an hour today – and £12.42 from this April. The proposals would benefit 850,000 workers, making up more than half of all people working in frontline care.

You can watch Ed explaining the policy to Laura Kuenssberg by clicking below:

In the clip, Ed says that only 2 in 5 people are being discharged from hospital when they should be, because of the shortage of carers. So, relieving the shortage of carers will reduce the pressure on hospital beds.

When asked how he would pay for the extra £2 pay for carers, Ed said that he would find the money by taxing the gambling industry, who , he said, deserve to pay more given the burden on the NHS caused by their activities.

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  • Good idea, however, probably not enough, remember Aldi are paying £11 p/hr nationally and £12.45 within the M25 for people without any further qualifications which carers require.

    I assume Ed isn’t proposing to reinstate the 2022 NI increase that for the financial year 2023 would become a 1.25% NHS levy.

    As to the practicality of the scheme, I suspect the scheme still won’t go far enough as the care people need in the first couple of weeks following discharge is much greater than they needed prior to admittance. To me a solution worth investigating is the reinstatement of convalescence homes.

  • Richard O'Neill 7th Feb '23 - 7:34pm

    Keep pushing on the gambling industry. I feel like it will be one in the long line of LD policies that the govt (Tory or Labour) will eventually adopt

  • Mark Frankel 8th Feb '23 - 8:00am

    Tax the biggest casino of all, the City, with a financial transactions tax. This would not be revolutionary but an extension of stamp duty on share transfers.

  • @Mark Frankel – financial transactions taxes (including stamp duty) are a pretty poor way to raise money. Much of the burden would fall on UK pension funds – and ultimately therefore back on the state. Similarly, most of the derivative transactions traded are hedging underlying foreign exchange or interest rate volatility, so the burden there would fall on people with mortgages, people buying food in shops, pension funds (again) etc.

    At least the externalities of taxing real gambling transactions are much more limited and better understood.

  • Peter Martin 8th Feb '23 - 2:31pm

    I thought I’d jump in before JoeB comes in with his inevitable call for a Land Value Tax to ‘fund’ whatever it is that we need extra money for at the moment!

    Not that it is a bad idea to have a LVT but it would be just another tax. Some Georgist enthusiasts refer to it as “Single Tax” and there’s no possibility that it would ever be that. The effect of a LVT on land values also needs to be factored in to any calculations. Suppose we have a piece of land with a current market value of £1 million and we introduce a LVT of 5% p.a. So the tax raised will be £50,000 p.a. Right? Well no it won’t because the land is going to be worth a lot less if there is there is £50k to pay out on it every year.

    So, a LVT will be nowhere near what many claim for it, but it is still worth thinking about

  • David Garlick 8th Feb '23 - 2:52pm

    Good idea and you have to start somewhere on increasing taxation if you want to spend more. Sadly I suspect that the majority of the gamblimg spend does not come from those who can most afford it so the cost will be borne by those on middle to lower incomes as thet will continue to gamble when the tax is passed on to them by the gambling industry.

  • Peter Davies 8th Feb '23 - 3:14pm

    Almost all taxes raise less than you would expect. The upside of that is the people they hit are not as much worse off (because their changes in behaviour are less painful than paying the tax). Some gamblers might actually end up better off because the taxes deter them from betting. There are a lot of former smokers who are better off because taxes on them were raised.

  • Patrick C Smith 8th Feb '23 - 8:09pm

    Sir Ed is absolutely foresquare with his resolute condemnation of the illegal Putin Regime invasion of Ukraine and that our Govt. must make Russia a pariah `rogue’ State in international law and name the brutism of the Wagner Group.

    Russia is a fundamental trangressor of International Human Rights since invasion of Ukraine in 2014 and again on 24/2/22.

    Social Care workforce must be offered a pay parity with their human care role that is indivisable and rewards their daily ethical care code of work practice for the 850,000 social care workers and 4 m cared for persons, when so many vulnerable and frail people are dependent on vigilant community home care.

    The tax on the Gambling Industry is long overdue and the rash of High Street local `gambling casinos’ will not be missed by either `gambling adicts’ or their own dependent familes.

    The existing `windfall tax’ should also be steeped to pay the additional social care diligent care workforce, when Shell and BP have reported their largesse of astronomical profits on the back of hyped Energy prices due to Ukraine War.

  • Peter Martin 9th Feb '23 - 9:39am

    The gambling “industry” did used to be taxed more than it is now. The betting tax was abolished in 2002 in response to the rise of offshore internet gambling which was offering it tax free.

    I’m not sure how Ed Davey is proposing we tax a betting company based in an offshore tax haven but unless he has a solution to the problem his idea is probably a non starter.

  • Peter Martin,

    taxes may be assessed on income, profits and gains or consumption. Taxes on land may be assessed on the basis of the income derived from land whether rents, capital gains or interest income from mortgages secured on land and on consumption of housing i.e. imputed rental income net of any interest cost.
    The capital value of any asset is the present value of its anticipated future income stream or utility. Land is no different to other assets in this respect. Council tax is based on estimated capital values while business rates are based on rental values. Both are indirect taxes based on consumption of housing or commercial property rather than income.
    What makes Land a suitable source of taxation is that it is a non-produced asset and the right to possession of land is granted by the state via registration of land titles. State licensing is why the oil and gas industry (and banking industry) is subject to surcharges over and above the main rate of corporation tax.
    As to betting tax on businesses in offshore locations, the rules that currently apply to digital services could be extended to gambling services. If you are a business making supplies of digital services to UK consumers, those supplies are liable to UK VAT. If you supply digital services to consumers via a third party platform or marketplace, the digital platform is responsible for accounting for VAT on the supply instead of you.
    If your supplies are liable to UK VAT you will need to register for UK VAT if you are based outside the UK.

  • Peter Martin 9th Feb '23 - 6:43pm

    @ Joe B,

    I think my point was that a LVT is worth considering even though some of the wilder claims from Georgists aren’t realistic.

    On the point of taxing the income stream of the gambling industry: I’d just ask why Gordon Brown rolled over that quickly if taxing it was that simple.

  • Peter Martin 10th Feb '23 - 4:21am

    @ Joe

    I’ve just checked a Google invoice to our business which certainly does qualify as the supply of a digital service to the UK. The invoice was issued by their Dublin office and there’s no VAT on it.

    It doesn’t really matter for us as we’d claim back the VAT anyway. But in principle Ì would agree that VAT should be applied. The problem is how to enforce such a rule when there is nothing tangible crossing national borders.

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