Deputy President, Financial Secretary Paul CHAN proposed in the Budget to impose an annual special football betting duty (“SFBD”) of $2.4 billion on the Hong Kong Jockey Club (“HKJC”) under the Betting Duty Ordinance for the five years from 2023-2024 onwards, while the current betting duty rates remain unchanged, with a view to increasing government revenue in the short term without affecting the payouts to the public and thus maintaining the competitiveness of the local football betting business. HKJC will also maintain its annual donations to charities.

I would first like to declare that I am an Honorary Voting Member of HKJC. The Government seeks to amend the existing Betting Duty Ordinance in accordance with the above proposal. I am speaking in favour of the amendment exercise because I support the Financial Secretary’s proposal.  As a contingency arrangement, it can avoid jeopardizing the interests of relevant stakeholders.

It should be noted that the current duty rate on football betting is 50% of the net turnover. The SFBD arrangement aims to fix the duty increase on football betting at the amount of $2.4 billion per annum for five years, which is equivalent to increasing the effective tax rate on football betting from the original 50% to approximately 62% over the applicable period. The fixed additional amount of $2.4 billion per annum over the next five years equals approximately 53% of HKJC’s average annual profits (net profits after operating expenses) of the past four years, which means that HKJC will still have net profits for its deployment. Furthermore, under the proposed arrangement, HKJC has made two undertakings: firstly, it will not reduce its payouts as a result of SFBD, meaning that the arrangement will not affect the dividend payable to winning punters in football betting; secondly, it will not reduce its charitable donations, which means that the subvented charities will not be affected. As far as I know, HKJC has vast reserves in its Charities Trust with tens of billions of dollars accumulated. Even if there is a need for large-scale projects or charitable services in the next five years, HKJC will still be financially capable of meeting such needs.

Some people may have concerns or even criticisms that the Government is “robbing” HKJC. Such negative perceptions are resulted from a lack of understanding of HKJC’s financial arrangements. Apparently, the Financial Secretary is insightful about HKJC’s financial arrangements and has thought it through before coming up with this contingency plan. As far as the football betting duty is concerned, as I have said, HKJC still needs to pay profits tax after its payouts, betting duty and operational expenses. As far as I know, the assessable profits exceeded $1 billion in each of the past three years, and the remaining balance after tax will become reserves, so HKJC can afford the tax for the next five years without affecting its dividend payments to football punters.

All in all, the Government has made thorough consideration so that HKJC and its staff, the payout arrangement and the subvented charities will not be affected. I would also like to commend HKJC for lending the Government a helping hand in times of need, manifesting its sense of corporate social responsibility. The Financial Secretary proposed this arrangement rather than increasing the duty rate on football betting which may affect the competitiveness of HKJC’s football betting business. Is this not a more brilliant way? While helping the Government, HKJC does not need to lay off its staff to cut costs, and the community will also benefit. This will be a triple win.

Lastly, Deputy President, let me recap some history. Back in 2003 when Hong Kong was facing a fiscal deficit, the Liberal Party suggested that the Government should introduce a football betting duty to increase revenue, and the Government subsequently adopted our suggestion. Today, after 20 years, we are facing a similar economic situation with a fiscal deficit, but contrarily, the Liberal Party opposes increasing the football betting duty because it may greatly reduce the high-value bets and in turn lead to a decrease in the related proceeds. As a result, both the tax revenue of the Government and the profits of HKJC would be offset by the loss.

The Liberal Party believes that the Government can consider introducing betting on other sports activities, such as basketball. I fully understand the Government’s concern that introducing more sports betting activities for more tax revenue will in turn encourage gambling. However, when we look at the case of football betting, people who gamble will always place bets, even with illegal bookmakers, whereas people who do not gamble will simply watch matches and never place bets. Therefore, in the face of a continued fiscal deficit, I suggest that the Government should also consider imposing betting duty on more sports activities, such as basketball, and commissioning HKJC to conduct them just the same―because HKJC will spend the proceeds so generated on charity―so as to increase its tax revenue.

Deputy President, I so submit.