Why Sobriety is needed in the 35 Percent Taxing Frenzy

By Juma Fred / January 12, 2018

There is still a lot of talk about the changes in the Finance Bill 2017 that are to take effect this year of 2018.

Some changes are positive according to analysts while some are punitive according to some. The debate has been centered on the 35 percent tax on earnings imposed on the gaming industry in Kenya.

I am not a proponent of gambling, neither am I a prophet of doom nor related to one but one thing that comes out of all the frenzy concerning the 35 percent tax is that there is the need for sobriety.

When the Cabinet Secretary for Treasury first presented his budget in Parliament on the taxing of the gaming industry, he had proposed 50 percent of the earning of betting firms in the country.

The Bill was then presented to the President who rejected the 50 percent and proposed it to be at 35 percent. This was an increased from the usual 7.5 percent.

One of the lame reason being given by those in support of the 35 percent tax is that “these firms make a lot of money.” Where is it written that when someone is ‘genuinely making a lot of money’ then we should punish them by heavily taxing them? Let us say the firms are indeed making a lot of money, so, is the government jealous of them and therefore ‘punishing them’ by taxing them?

If indeed these betting firms are making ‘a lot of money’, have we sat down and looked at how they are using the ‘a lot of money’ they are making? In a normal betting firm, for those who do not know, 50 percent of their earnings go back to the people as ‘prizes’. This is not to forget that more than 25 percent of the same is used for corporate social responsibility program. Now, the little that they remain with has to be ‘looted’ through tax.

Some questions should be considered carefully before adopting the ‘mob mentality’ on this issue:

  • Did the government consult with stakeholders as well as experts before coming up with the 50 percent and then later 35 percent?
  • Are the gaming firms giving back to society? How much are they giving back? How does the society feel about them?
  • When something is prospering, what is the best way to treat them? Punish them so as to slow down their success or find ways to cheer them on?

No country has ever realized its full economic potential through heavy taxation.

About Juma Fred

Juma Fredrick is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it. You can reach him on: (020) 528 0222 or Email: [email protected]

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