MOA opposed to 15pc excise duty on alcohol, gambling ads

The Media Owners Association (MOA) is opposed to the introduction of 15 percent excise duty on advertisements related to alcoholic beverages, betting, gaming and lotteries.

In its submission before the Finance and National Planning Committee on the proposed Finance Bill, (2023) on Monday, the association led by Chairperson Agnes Kalekye said there is need to have the proposal deleted, saying it will have far-reaching implications including significant loss of jobs in the industry.

Kalekye, who was accompanied by other MoA members, told the Molo MP Kimani Kuria-led committee that the tax increase will significantly reduce expenditure on advertisement yet media outlets depend on the revenue for survival.

“Our expectation is that these companies will significantly reduce their expenditure on advertisements, action that will negatively impact on our revenues and lead to cost-cutting measures including laying off personnel,”

– she said citing the current tough economic times facing media stations, most of which have already laid off a significant number of staff due to reduced revenue.

According to the Media Owners Association, alcoholic beverages, betting, gaming, and lotteries are already subjected to excise duty and hence the move to increase it by 15 percent will only subject the products to multiple taxations.

“If the rationale is to regulate the advertisement, it’s important to note that advertisement of such products are already regulated with regards to the size of the advertisement and the timings at which the advertisements are aired,” – Kalekye told MPs.

If the proposed Finance Bill 2023 passes with the clause on increased 15 percent excise duty on advertisements on alcohol and betting activities, the media companies may be forced to increase the cost of advertising fees by 15 percent so as to meet the tax obligation.

“Advertisements relating to alcohol and betting/gaming are already regulated as far as the billboard and other printed material sizes are concerned, and also in relation to airing times. Introduction of excise duty with a view to regulating advertisement would, therefore not be an effective regulatory tool,”

– she said when she made the submissions accompanied by the MoA members and Philip Muema of Andersen-the association’s tax consultant.

Finance and National Planning has commenced week-long public hearings on the Finance Bill, 2023. The Bill has a timeline approval of 30th June to coincide with the enactment of the Appropriation Law, 2023.

On the emotive 3 percent Housing Fund, the association wants it deleted or made optional for staff and keep off employers because it will overburden the payroll. The association is also opposed to the introduction of 15 percent withholding tax on digital content monetization.

In the submissions made on Monday, the association said the digital economy is an integral part of Kenya’s Vision 2023 hence the need to make laws that do not stifle its growth.

“Should it be found absolutely necessary to introduce this tax, we propose specific elements of digital content monetization are excluded from the tax bracket in order to avoid administrative difficulties of collecting ta and to allow the industry to grow at a reasonable annual rate,” – Kalekye said.

She also expressed concerns that the proposed levy will affect the industry because it goes against the government policy on job creation.

“Since we have Gen Z content creators, there is uncertainty on how these minors will be taxed because they have no PINs,” – she said.

On the proposal to increase the marginal rate of tax from 30 percent to 35 percent, the MoA said the clause should be deleted and the income tax retained at 30 percent.


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