The tax on gambling remains a hot issue for Kenyan politicians as President Uhuru Kenyatta rejected the Finance Bill 2018 and proposed to cut the tax from 35% to 15%. Until the Bill is signed, the Treasury would not release funding for local sports bodies, including salaries and renovations-related expenditures.
In a memorandum, President Uhuru Kenyatta has expressed his opposition to the Parliament, with one of the main topics discussed being the gambling tax. On Monday, African website Business Daily reported that Kenyatta rejected the Finance Bill 2018, which is one of the essential documents to be passed by Members of Parliament. His reasons were, according to the online publication, very clear – the gambling tax should be cut from the current 35% to only 15%.
This is not the first time the Kenyan President takes steps to reduce the tax on sports betting and lotteries. Several weeks ago, he supported the same proposal which was made by the Finance and National Planning Committee. A similar plan was introduced back in June as part of the Tax Laws Amendment Bill 2018. Both measures were rejected by members of the Parliament who remained confident that the tax on gaming should be higher.
A House member, who wished to be anonymous, told the Business Daily that they would not agree to halve the tax to 15% for one simple reason – the negative social impact of gambling, which would be aided by lower taxes. The disagreement between the President and the Parliament is much more than just institutional battles as it already has undesirable consequences. Sports teams and local sports bodies are now waiting for funding from the government. It is delayed, however, due to the gambling tax conflicts.
The money is not a direct government funding for local sports but rather a portion of all gambling tax revenue collected from betting shops and other gambling operations. The government has collected Sh8 billion or roughly US$79.3 million, some of which should fund sports bodies. Sports Cabinet Secretary Rashid Echesa told Kenyan media outlet Standard that the Treasury needs approval from the Parliament to release the funds. According to local reports, the head coach of the national football team has not received a salary for two months as a direct result from the institutional dissent.
President’s Proposal Seen as Controversial
President Kenyatta may be currently confident that the gambling tax should be reduced but it was him who approved a 35% tax on gaming in the first place. Last summer he signed a gambling tax bill into a law and from January 1, 2018, all gambling products were subject to the tax. This uniform rate replaced the modest 5% tax on lotteries and 7.5% tax for sports betting operations which were in effect prior to 2018.
Originally, the intent was reducing the alarmingly high rates of gambling among young people. The Treasury Secretary even requested a 50% tax on all gambling products but Kenyatta suggested that a 35% rate would be a much more balanced and effective tool to contain minors gambling while allowing for healthy revenues. His decision to decrease the rate to 15% was seen by many as a controversial move. According to higher tax proponents, his new ideas demonstrate lobbyists’ clear influence on President Uhuru Kenyatta.
