The Media Owners Association of Kenya has made a formal request to the government to reconsider the proposed taxation on gambling advertisements as outlined in the Finance bill for 2023
The association’s chairperson, Agnes Kalekye, addressed the Finance National Planning Committee on March 29, expressing the need for the removal of this additional tax. Kalekye emphasised that the bill’s provision, which entails a 15% rise in excise fees for advertising on television, print media, television billboards, and radio stations, specifically targeting alcoholic beverages and all forms of gambling, should be eliminated.
Addressing MPs, Kalekye stated “If the rationale is to regulate the advertisement, it’s important to note that advertisements of such products are already regulated with regards to the size of the advertisement and the timings at which the advertisements are aired.”
According to Agnes Kalekye, the Chief Operating Officer of The Star Newspaper and chairperson of the Media Owners Association of Kenya, the proposed tax could have severe repercussions, extending beyond its immediate impact. Kalekye warns that the implementation of this tax would potentially lead to widespread job losses within the media industry. The reason behind this concern lies in the anticipated inability of media outlets to effectively sell their advertising space if the tax is enforced. Consequently, the imposition of this tax poses a significant threat to the economic viability of media organisations, exacerbating the already challenging landscape they face.
Currently, gambling advertisements in Kenya do not attract excise duty, although they are subject to other taxes and regulations. The opposition to the proposed taxation was further reinforced through an open letter published in the Star newspaper on March 30th. Agnes Kalekye, in her letter, emphasised the need for specific elements of digital content monetisation to be exempted from the tax bracket. This exemption would serve two purposes: easing the administrative challenges of tax collection and fostering reasonable annual growth within the industry.
More organisations are expected to oppose the government’s tax proposals
This issue comes to the forefront at an opportune time as the Finance and National Planning Committee conducts a week-long hearing to deliberate on various tax changes proposed by the government. In a series of crucial meetings, the Media Owners Association (MOA) was among the 18 organisations that have already participated and voiced their opposition to the bill in various capacities. As the week progresses, it is anticipated that many more organisations will add their names to the growing list of dissenters.
The MOA’s stance aligns with recent concerns raised by the Media Council of Kenya (MCK), an independent national institution responsible for establishing and enforcing media standards. In an open letter published on May 23, the MCK expressed apprehension regarding the escalating presence of gambling advertisements across media platforms.
In response, the MCK advised journalists and media enterprises to exercise caution and only accept advertisements from licensed operators for publication. This recommendation aims to ensure compliance with regulatory standards and promote responsible advertising practices in the gambling industry.
From 7.5% to 20% for betting, gaming, and lotteries
In an effort to address a substantial budget deficit, President William Ruto has proposed a range of changes to excise duty, including a significant increase from 7.5 percent to 20 percent for betting, gaming, and prize competitions. Additionally, the proposal aims to raise the excise duty for lotteries to the same rate of 20 percent.
Increasing government revenue has been a focal point in negotiations between Kenya and the International Monetary Fund (IMF). Just last week, the IMF agreed to provide Kenya with a loan of €927 million to assist the financially strained country.
President Ruto, during a development tour on March 21, highlighted the tax increases outlined in the bill as measures that will enhance the lives of Kenyans. He also promoted a housing program, claiming it would generate a minimum of one million jobs.
The decision on the bill has gained significant public attention in Kenya and is expected to be finalised before June 30, 2023. The proposal has already faced criticism from opposition legislators and certain business owners prior to the hearings.
Modernising gambling regulations and enhancing revenue generation in Kenya
In addition to tax changes, Kenya’s gambling industry is currently experiencing a comprehensive transformation. The government is taking steps to modernise its gambling regulations and enhance revenue generation from the sector. The newly established National Lottery Taskforce has published the draft Gambling Control Bill 2023 and the draft National Lottery Bill 2023 on its dedicated website.
Alongside these bills, the task force has also released a draft gambling policy for Kenya in 2023, outlining the intended framework for the industry. Furthermore, the Kenya Revenue Authority has been actively working to ensure that all license holders are integrated into its newly implemented real-time monitoring system. This system has already proven effective in boosting tax collection within the gambling sector.
These initiatives highlight the government’s commitment to streamline the gambling industry, strengthen regulatory oversight, and maximise revenue generation for the country.
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