SUSPEND 20PC WITHHOLDING TAX ON WINNINGS
Dear Editor,
As Patriots for Economic Progress (PeP), we call upon the UPND Administration in general and President Hakainde Hichilema in particular to immediately suspend the 20 percent withholding tax on online betting winnings as it is grossly unfair.
It must be noted that the majority
of online betting winnings are extremely small amounts of less than K10, 000 and it is only two or three people that win more than K100, 000 in a year, across all the online betting companies.
It should also be noted that before a person finally wins an online bet, they would have lost several times such that in most instances their net position would still be negative despite winning an online bet.
One of the fundamental principles of taxation is that it must be fair and equitable. It is definitely unfair to impose a 20 percent tax on a person who is in a negative net position because they have lost more money placing online bets than they have won.
As PeP, we call upon the government to distinguish between the winnings of online betting and the winnings of a lottery. We all know that when someone wins a lottery the amount is always huge such that there is no question that the person is in a positive net position, meaning that the value of their winnings is far greater than what they invested to buy the lottery tickets over a period.
However, online betting is different because the amounts won can be as small as K50. Therefore it is unreasonable for the government to claim a K10 out of a K50 winning when the person has so far spent thousands of Kwacha to place bets, which means that despite winning a K50 the person is still in a negative net position because they have spent more than they have won.
We further wish to advise the UPND Administration that the majority of the people who undertake online betting are jobless youths. And when they win a bet, which is rare, such winnings do not make them rich but merely sustains them.
Our advice to Government is that they should either scrap the 20 percent withholding tax on all online betting winnings or they should only maintain it for winnings above a certain threshold such as K1, 000, 000.
Indeed, when someone wins a K50, it does not constitute a windfall and they do not deserve to be taxed on it. However, when someone wins K1, 000, 000 it is a windfall and it might be acceptable to tax them on that amount.
It must be noted that the principle of exempting certain nominal winnings that we are proposing is already being practiced when it comes to Pay As You Earn (PAYE) whereby amounts below K48, 000 per annum are exempt from tax. Therefore, if Government can provide an exemption threshold of K48, 000 per annum for citizens who are in formal employment, then why can’t they do the same for citizens who are unemployed and depend on online betting?
We would like to make it clear that if the UPND administration in general and President HHichilema in particular wanted to suspend the implementation of the 20 percent withholding tax, they would.
The excuse that this tax law was enacted during the previous administration does not hold water. The bottom line is that this tax is neither fair nor equitable. And we wish to emphasise here that we are not asking Government to give preferential treatment to the unemployed youths, all we are asking is that they be treated fairly by granting them a minimum exemption similar to the K48, 000 PAYE exemption per annum that is granted to their colleagues who are in formal employment. What is good for the goose must be good for the gander.
SEAN E. TEMBO,
PeP President.
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