Uhuru proposes 35pc betting tax, fails to assent the Finance Bill into Law

President Uhuru Kenyatta has returned the Finance Bill 2017 to the National Assembly recommending that  betting firms revenues be taxed at 35 percent from the proposed 7.5 percent.

President @UKenyatta refuses to assent to Finance Bill 2017 over parliament’s deletion to clause raising betting tax to 50% from 15%

— Manoah Esipisu MBS (@MEsipisu) June 13, 2017

The President said he rejected the Bill because Parliament deleted the clause that was designed to discourage the youth from engaging in betting.

The purpose of Amendment of Section 59 B of Cap 469 was to “discourage Kenyans, and especially the youth, in directing their focus on betting, lottery and gaming activities instead of productive economic engagement, a vice that is likely to degenerate into a social disaster.”

The proposal, which read, “29. Section 59B of the Betting, Lotteries and Gaming Act is amended in subsection (1) by deleting the word “fifteen” and substituting therefor the word “fifty” was however dropped when Parliament passed the Bill.

“This totally negates the spirit underlying the proposal to have the betting tax raised as pointed above,” said the President in his proposal signed on Tuesday.

“Section 59B of the Betting, Lotteries and Gaming Act is amended in subsection (1) by deleting the word “fifteen” and substituting therefor the words “thirty-five,” he recommended.

The Betting, Lottery, Gaming and Competition Industry was hit the hardest in the Financial Year 2017/ 2018 Budget after Treasury Cabinet Secretary Henry Rotich raised the tax to a standard 50 percent.

Rotich had said, “Betting and Gaming have become widespread in our society in an environment that is inadequately regulated. Its expansion is beginning to have negative social effects in particular on the youth and the vulnerable members of the society.”

However, in May the National Assembly approved recommendations by the House Finance Committee to retain betting tax at the current 7.5 per cent from the proposed 50 per cent.

Further, the bill had proposed the lotteries to be taxed 5 percent to 50 percent, the gaming industry from 12 percent to 50 percent and similar to firms running competition prizes from 15 percent to 50 percent.

Analysts had noted that,”The increase in taxes is a big blow to the industry that has grown tremendously in the recent years. The unintended consequences of the increase may be a drive to the practice of underground industry and lead to illegal gaming. Alternatively, the betting and gaming firms may choose to relocate outside the country denying revenue to the country,” according to Grant Thorntorn.