Casinos, lottery operators to pay 50 per cent tax

Casinos and lottery operators will hand over 50 per cent of their turnover to the taxman after MPs backed proposals by the National Treasury and rejected those of the Finance Committee.

Gambling companies that run prize competitions will, just like the casinos and lottery operators, also hand over to the taxman half of what they are left with after paying out winnings.

Betting companies were, however, spared the increase of their tax from 7.5 per cent as MPs revolted against the Finance Committee’s proposals that they throw out the National Treasury’s increase to 50 per cent.

All this will, however, await consultations and lobbying over the weekend after the Finance Committee activated House rules that allow the matter to be revisited. Without the Finance Bill having gone through the last stage, where at least 50 MPs are needed to approve the Third Reading, those who are against the increase still have time to fight back.

Finance Committee chairman Benjamin Lang’at was caught offside by the sudden decision by MPs to reject the proposal by his team to throw out the National Treasury’s proposed increase.

'DANGEROUS GROUND'

Kikuyu MP Kimani Ichung’wa touched off the storm when the matter came up, saying that maintaining the tax rates approved last year, and whose implementation began last February, would amount to a death sentence on youth.

“We are treading on very dangerous ground to create opportunities for business but killing peasants. Let us use taxation to save the youth of this country,” he said.

He was supported by Wajir Woman Representative Fatuma Ibrahim. She said: “When you want to discourage people from indulging in a bad practice, you have to make it unfavourable for people to go into that business.”

Gladys Wanga (Homa Bay Woman Rep, ODM) also backed the idea to increase the taxes on the basis that it is not the first time that taxes are being used to discourage social ills.

“The committee should really be disclosing to us what happened in Mombasa, why they are treating us to this circus. What the committee should be telling us is what is a better tax, not taking it back to what it was,” she added.

SUPPORT WANGA

Imenti North MP Abdul Raheem Dawood, who is also a member of the Finance Committee, disowned the committee’s decision, while Francis Waititu (Ruiru, Jubilee) supported Ms Wanga.

But declaring that there was mischief in the way the Bill was being handled, Makadara MP Ben Mutura disrupted progress by informing temporary Speaker Moses Cheboi of the lack of quorum. The quorum bell was rung for the requisite 10 minutes and when the sitting resumed, the three other Finance Committee’s proposals to reject those by the National Treasury were thrown out.

Mr Langat, chairman of the Finance Committee, had told his colleagues that the agreement to have the 50 per cent tax refused was reached after consultations with stakeholders, the National Treasury and an audit firm. There were also comparisons with what happens in Uganda, Tanzania and the United States.

Minority Leader Francis Nyenze and his deputy Jakoyo Midiwo argued that increasing the taxes would drive the nascent sector underground.