Calls for higher gambling taxes in Kenya

Despite warnings from the Kenya Revenue Authority that increasing the tax burden on the country’s gambling industry runs the risk of a goose and golden egg scenario, the Parliamentary Budget Office (made up of multi-disciplined experts who advise elected officials) has called on Treasury Cabinet Secretary Henry Rotich to do just that in his 2017/2018 Budget presentation scheduled for March 30, 2017.

The PBO argues that the betting industry is prosperous, yet is only taxed at between 12 and 20 percent, and that Rotich should raid the sector for a bigger slice of its estimated Sh200 billion annual turnover.

The office has suggested that a more aggressive approach to taxing the industry is needed, classing it as a “sin tax” in the same way as alcohol and tobacco are regarded.

“In recent times, the gambling industry has experienced unrivalled growth, exponentially so, and the sustenance of this trajectory is expected. Therefore, tapping the unexploited tax potential from the multi-billion shilling betting, lotteries and gaming industry is long overdue,” the Budget Office recommended in a 62-page report to members of parliament.

The PBO forecasts that higher tax rates on betting can “more than double” the money that the Kenya Revenue Authority makes from the betting, gaming and lottery industry at present.

“Currently, the industry is estimated to have a potential gross turnover of Sh200 billion annually and may grow more and more rapidly in the coming years,” the report notes. “Taxation of this industry should be in the class of other sin taxes in design and rigour of collection.”

The KRA has collected Sh4.7 billion from the gambling industry since 2014, and this financial year it is expected to rake in Sh3.4 billion.