It's time to rethink tax measures on gambling
SEE ALSO :A silver lining for betting fansI, therefore, see a need for serious rethink on betting sector taxation and a review of relevant legislation to include a determined revenue generation approach. It is estimated that global illegal betting could be upwards of $500 million because of such fundamental flaws. The US and UK consistently and continually update their laws to keep pace with new realities. The Gambling Act 2005 in the UK, for instance, established a process to licence potential operators and ensure protection of consumers. The PWC report of 2016 puts the annual gross turnover of the industry in Kenya at $20 million. The Government is literally trying to keep up with the pace of the industry to date. Attempts to consolidate economic gains from the betting industry began in 2017 with the imposition of withholding tax of 20 per cent. This was, however, an unviable and unworkable decision whose implementation proved worthless. In revisiting the approach, the Government ended up initiating an unprecedented trend of inconsistent annual tax reviews. Each year since then, has seen a different tax approach and design. The volatility of such unilateral decisions destabilises the sector as they make trends unpredictable and hence limit investment viability.
SEE ALSO :GeoPoll, Ipsos: Jobless bettors unbowedThe President is on record stating that the Government wants to create an investment climate that enables those putting their money in the local economy to do so with 20, 30 or 50 year plans. In rescinding its decision on withholding tax after a year, the Government opted for 35 per cent tax on GGR. It would later change to 15 per cent tax on GGR, 20 per cent withholding tax and recently the proposed 10 per cent excise tax on wagers. This annual back and forth ritual creates uncertainty for investors. Sections 16, 18, 22 and 46 of the Betting Lotteries and Gaming Act provide for licensing of several forms of activities that may give rise to the ‘winnings.’ There is need for a broad and dynamic definition that allows room for growth and innovation in the industry. Imposing ‘Sin Tax’ should be done in a manner that enables the industry to grow. The multiplicity of gaming activities makes it impossible to collect the tax. The different approaches with multiple cost options and application distinctively put into question taxation methodology. Industry players have not, and do not have direct objection to taxation.
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