Hong Kong wants to raise cash but taxing Jockey Club isn’t the right way
- The club is already Hong Kong’s largest taxpayer and one of Asia’s top donors, with charity contributions outpacing growth during the pandemic
- With higher taxes likely to eat into competitiveness and revenue, calls to raise betting duties will do little beyond earning politicians brownie points
However, a closer reading of the facts exposes the flawed nature of this argument. First, HKJC is the single biggest taxpayer to the Hong Kong government, thanks to the betting duties levied on horse and football betting. In the 2021/22 financial year, it returned a record HK$33.6 billion (US$4.3 billion) to the community.
Although HKJC achieved a new turnover record of HK$290 billion in 2021/22, this needs to be put into perspective. Between 2011 and 2022, HKJC’s charity donations increased by 288 per cent. However, its net margin only increased by 96 per cent in the same period.
The growth of HKJCs charity contributions has far outpaced its business growth rate. Its charitable work, spanning elderly services, education, sports, and arts and culture, complements what the government provides and strengthens civil society collaborations.
In business terms, HKJC is a high performer. It thus makes no sense to increase Hong Kong’s football betting duty just because HKJC’s business is performing well – this idea effectively penalises excellence.
Hong Kong has the highest betting duty rates in the world, with HKJC paying from 15 per cent to 65 per cent more than other operators. Any increase in football betting duty will thus eat into its competitiveness and see more Hong Kong people bet illegally. The result will mean less, not more, tax contributions to the government.
Higher tax payments will also affect the ability of any organisation to make continued investments to stay competitive. HKJC is a rare home-grown global brand that finds its main betting turnover growth driver in bets placed from overseas, especially during the pandemic years. It will need to constantly upgrade its racing product and IT facilities to maintain its appeal.
If anything, it is disadvantaged by many regulatory restrictions. For instance, illegal and offshore bookmakers provide better odds under no or lower betting duty obligations. Moreover, they offer a far wider range of betting products which are not available in Hong Kong, such as basketball and Formula One racing.
End consumption vouchers, the money can be better spent elsewhere
While annual calls to raise Hong Kong’s football betting duty may score cheap political points, the idea that such tax increase will easily lead to increased government revenue is as simple-minded as it is counterproductive. Fiscal policymaking requires a holistic, solid analysis of the facts, not populist politics that sag the quality of public debate.
Francis Neoton Cheung is the convenor of Doctoral Exchange, a public policy research collective, and a former member of the Land and Building Advisory Committee