Gambling companies were last evening handed victory in their fight against high taxes after MPs threw out a proposal by the National Treasury to increase their taxes after paying out winnings to 50 per cent.
By doing this, they reversed the decision made last Thursday.
MPs started the law making manoeuvring by ganging up to reject the compromise 35 per cent tax proposal presented by Majority Leader Aden Duale, arguing that they were illegal because the Finance Committee had not been consulted.
The Finance, Trade and Planning Committee received the backing of MPs and successfully argued that the 50 per cent that had been approved last week was too high and likely to kill the business.
Subukia MP Nelson Gaichuhie told his colleagues that Treasury, gambling companies, the Betting Control and Licensing Board had all agreed on keeping the taxes as they had been approved last year.
“Once we delete these (proposals), it does not mean that these people will not be paying tax. They will still be paying corporation tax at 30 per cent and 7.5 per cent of their revenue,” said Mr Gaichuhie before the proposals on betting companies were rejected.
Rejection of the Treasury’s proposals means that betting companies will continue to pay tax at the rate of 7.5 per cent, casinos and other gaming companies 12 per cent, lotteries at five per cent and prize competition at 15 per cent.
Budalang’i MP Ababu Namwamba, who was the Sports minister when the Sports Act, which recognises sports betting as legitimate, was passed, asked his colleagues not to kill the flourishing sector.
“The economic benefits of standardised, regulated betting cannot be overstated. To tax gross revenues at 50 per cent is to send all betting firms to their grave,” said Mr Namwamba
He said killing local companies would allow foreign betting companies to reap where the current ones are making money as it would still be possible to bet online.
Mr Namwamba said MPs should think of ways to allow betting firms continue being in business while watching out for the interests of those affected.
Kipipiri MP Samuel Gichigi said: “That 50 per cent was sneaked in by someone who has an axe to grind with the industry. It is not based on anything. It is not based on any research.”
Marathon runner and Cherangany MP Wesley Korir said the betting industry has done more for sports than anybody else and that it would be wrong to impose punitive taxes on them.
Mr Duale said as a result of the reprieve for the gambling companies, “betting, lottery and gaming will flourish.”
“It will affect the young people in this country. I thought we would agree between Treasury, MPs and the tax collector,” he said.
Kikuyu MP Kimani Ichung’wa said he would in the future propose changes to the law so that winnings are taxed.
Earlier, Mr Duale was outmanoeuvred by his colleagues, with Kipkelion East MP Joseph Limo, a member of the Finance Committee, asking the Speaker to throw out the Majority Leader’s proposal on the basis that there was no agreement with the team.
The Constitution requires that a money Bill be scrutinised by the relevant House Committee in consultation with the Treasury.
“As a committee, we have not sat down with the Majority Leader. We have not agreed with him. If we are to pass his amendments, it would be unconstitutional,” he said.
He was supported by MPs Moses Kuria (Gatundu South, Jubilee), Finance Committee chairman Benjamin Lang’at and Minority Whip Thomas Mwadeghu, among others.
At the end, Speaker Justin Muturi closed the argument and ruled against Mr Duale, saying: “These proposed amendments by the Leader of the Majority Party offend Article 114 of the Constitution and should therefore be expunged from the Order Paper.”