A rise in betting taxes is set to take place in Kenya. This comes as part of a planned change to the Excise Duty Act of the Finance Bill of 2022. Taxes on all betting will be raised to 20 percent or Sh200 of every Sh1,000 wagered, regardless of wins or losses.
The new steep tax hike is partly aimed at raising around Sh50.4 billion in taxes to help fund a massive Sh3.32 trillion national budget. The government, however, also hopes it will help curb what it feels is too quickly becoming a national pastime in Kenya.
Government Maintains its Stance
Vocal critics of Kenya’s growing betting industry such as Treasury Cabinet Secretary Ukur Yatani, who proposed the new tax in 2019, have many concerns about the growing trend in betting in Kenya. Like many, Yatani is particularly concerned about the youth and the repercussions of irresponsible gambling.
In recent years, taxes on the betting industry in Kenya have steadily increased as government regulation has struggled to keep up with its rapid growth. The hike will come at a time when taxes on commercial online gambling are already high, as these activities are easy targets for so-called “sin taxes”.
Though the impending tax law was first instated in 2019, betting operators in Kenya were successfully able to lobby for its removal a year later. Since then, the tax has been at a far lower 7.5 percent of every Sh1,000 wagered. Now, the Kenyan Treasury is seeking to reinstate the tax law. If successful, they aim to have the 20 percent tax reinstated well ahead of the coming elections in August 2022.
Their concerns over the youth are not unfounded. The rapidly increasing popularity of betting in Kenya has caused a corresponding rise in irresponsible gambling. The resulting loss and moneylending have led to a higher rate of debt, and also suicide, over time.
M-Pesa, the largest operator in Kenya, reportedly made around Sh83.2 billion in the six months leading up to September 2021. This represented a 69 percent increase from the prior year. Other betting firms have also shown a swift and steady growth at around 35 percent, despite the efforts of the government.
Reliance on Sin Taxes
“Sin taxes” have steadily become a favorite generator of revenue for the Kenyan government. Their target is not only betting, but also alcohol, cigarettes, and food and drinks that contain sugar. In the new amendments to the Finance Bill of 2022, Yatani aims to raise all sin taxes to create greater revenue for the government.
High taxes on betting have thus far had some small level of success with the growing issues surrounding betting in Kenya. Otherwise, the government has banned betting companies from advertising on television or radio. Many support centers and helplines are being established by both government and betting firms. There are also various initiatives being started to educate and warn the public and youth about the pitfalls of irresponsible betting.