Kenya: What next for betting firms after Uhuru rejects Finance Bill 2017?

Members of Finance, Trade and Planning Committee must have choked. Their proposal to retain taxation rates on paid-out winning bets is leaving.

Now, Budalangi MP Ababu Namwamba-led team is at an unfamiliar crossroads after plot to ‘repeal’ taxation system for betting and gambling sector failed to see light of the day, after President Uhuru Kenyatta rejected the Finance Bill 2017 and recommended that betting, lotteries and gaming activities be instead taxed at the rate of 35 percent.

The direction Members of Parliament (MPs) and the House at large choose will determine whether the recommendations granted by members of Finance, Trade and Planning Committee survives when debate on the same kicks-off, or faces new threats as Gem MP Jakoyo Midiwo and Majority Party leader Aden Duale continue to simmer.

In a memorandum to the Speaker of the National Assembly Justin Muturi, Uhuru said he rejected to assent to the Bill, which was meant to amend the laws relating to various taxes and duties, because Parliament deleted the clause designed to discourage the youth from engaging in betting-related activities.

“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,” read the memo in part.

Last month a group of MPs drawn from Finance, Trade and Planning Committee eschewed the proposal by National treasury to raise taxes on betting, lottery, gaming and competition to 50 per cent, recommending the current rates of 7.5 per cent, 5 per cent, 12 per cent and 15 per cent, respectively, in a move seen at the time to make a departure from the initially proposed uniform tax rate of 50 per cent.

This new development means that the MPs led by Budalangi Member of Parliament, Ababu Namwamba, is a big blow to efforts by Finance committee whose recommendations could be put to test when debate on the same kicks-off.

The 50 per cent proposal according to Treasury was meant to develop the country’s sports and arts, according to Treasury Cabinet Secretary Henry Rotich whose office had made the suggestion in the 2017/2018 fiscal budget.

“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 Uhuru in the proposal signed last evening.

He has recommended that Clause 29 of the Bill be reinstated with amendment to read: “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.”