How gamblers will chip in to fund President’s Big Four agenda

The government has set up a multi-billion-shilling special kitty to be financed by the 20 per cent tax imposed on lottery winners and 15 per cent on betting and gaming companies.

According to National Treasury Cabinet Secretary Henry Rotich, the government expects to generate over Sh40 billion from gaming firms to finance sports and arts.

Also, the taxes imposed on banks transactions of over Sh500,000 and the two per cent on mobile money transfers, is projected to generate an additional Sh10 billion towards the kitty to finance one of President Uhuru Kenyatta’s Big Four Plan - universal health.

“The newly-established special fund is likely to raise over Sh50 billion from the new tax proceeds,” said Mr Rotich while addressing journalists at Parliament buildings, minutes after reading the 2018/2019 budget.

He continued, “The funds are set to support development of sports, culture and arts in Kenya. It will give the youth an opportunity to excel in the creative industry.”

The CS appears to have resolved the contentious issue of 35 per cent tax on the gaming industry. The betting winners will now shoulder the highest tax at 20 per cent, as the firms only pay 15 per cent.

Last year, President Kenyatta returned the Finance Bill back to the National Assembly with recommendations that tax on betting, lotteries and gaming activities should be at 35 per cent, instead of a uniform 50 per cent proposed by Rotich.

Following stakeholder meetings, Parliament passed the Finance Bill 2017 by deleting the contentious clause on taxation for betting, lotteries and gaming activities.

The MPs amended the clause reducing the taxable rate to a uniform 15 per cent.

The Head of State, in a memorandum to speaker Justin Muturi, said he refused to sign the Bill into law following the omission of the clause designed to discourage youth and vulnerable members of society from participating in betting activities. Rotich while presenting the 2017-18 budget statement, noted that betting and gaming had become widespread with minimal regulation.

He had proposed the taxes be raised from 7.5 per cent (betting), 12 per cent (lottery), 15 per cent (gaming) and 15 per cent (competition) introduced in the Finance Act 2016 to a uniform tax.

In April this year, following talks between gaming firms and government, Treasury yielded to pressure from betting firms and proposed to cut gaming tax from 35 per cent of revenue to 15 per cent.

The ministry has now shared the burden on operators by transferring the pain to individual gamblers who will have to pay 20 per cent of their winnings to the taxman.

The firms estimated that the high taxes would hurt the regulated businesses and create a black market of people taking bets.

The betting firms argued that they pay 30 per cent corporate tax and dedicate 25 per cent of their sales to social causes like sports sponsorship, as a legal requirement, before taking care of winnings and other operating expenses.