The warning by Kenyan casinos of looming mass shutdowns and job losses due to a heavy taxation burden should be taken seriously.
According to industry stakeholders, 10,000 jobs in the sector risk now being lost as the economics of the business may not allow them to shoulder the extra tax burden.
They now want the government to reverse the 35 per cent tax chargeable on the industry. Casinos were previously paying 12 per cent tax on turnover.
The Kenyan economy cannot afford to lose such a large of jobs as the country struggles to cope with a biting unemployment problem, which is a ticking time bomb.
Taxation of betting lotteries and prize competitions has also risen to 35 per cent of turnover, which has prompted some major players suspend operations or cancel sponsorships of various sports organisations.
The new flat taxation rate treats all businesses in the sector the same despite the different models and cost structures, which the previous taxation regime had taken into account. Casinos argue that they also have significant fixed costs like rent, utilities, security maintenance and salaries.
We urge the government to tread very carefully on the taxation plan and sit down with the stakeholders in order to find an amicable solution to the impasse.
The fact remains that main players in the sector may move to more tax friendly markets if it refuses to budge. The core question we should be asking ourselves is whether the Kenyan economy can afford to shed thousands of jobs.
While the government has been adamant that the uniform tax rate on gaming revenue is not up for negotiation, it should not reject any overtures that are aimed at ending the deadlock.
We opine that a workable solution can be found if the government and industry players sit down and thrash out the contentious issues. We reiterate that the economy cannot afford to shed such a huge number of jobs from one sector alone.