During his presidential campaign, President John Dramani Mahama hinted at removing the controversial 10% tax on all winnings bets.
Now that he has assumed office, should he go ahead and abolish it?
The 10% withholding tax on winnings was imposed by the previous administration in the hope of curbing the rate of gambling, and generating more revenue for the country.
The move was met with widespread dismay by Ghanaian bettors, who felt the government was being insensitive to their plight.
With the change in power, Ghanaian punters are now demanding that the tax be removed.
Betting expert, ‘Leye Ayodele, agrees that the government should overhaul the tax laws in the country.
“I think the government is missing a trick with the taxation system”, said Ayodele, editor at BetBlazers Ghana, a site that analyses and reviews betting companies in Ghana.
“Rather than imposing taxes on winnings, the government should consider taxing betting stakes instead. This way, they are guaranteed to get some revenue from every bet”, the expert continued.
“They are shortchanging themselves by taxing winnings and not stakes because only a very small percentage of bets placed results in winning bets. So the 10% tax on winnings is not only unfair to bettors, it’s also a less effective policy from a revenue perspective”, Ayodele concluded.
Betting taxes in Ghana have always been a touchy and controversial subject. While the bettors and other stakeholders want the taxes on winnings taken out, there are other groups that insist on the taxation.
In fact, some have even called on the new government to increase the taxation percentage!
The Institute of Community Sustainability recently challenged the government to raise the withholding tax from 10% to 50% in order to dissuade young people from sports betting.
They argued that betting poses a great threat to the well-being of young Ghanaians, draining them financially and dropping their productivity and potential.
The Institute makes a valid point. Ghana does have a high percentage of young bettors, many of whom see betting as a means to getting quick money.
But as many people have found out, it doesn’t quite work that way, and most of the time, some of these bettors have been left heartbroken.
It is a matter that needs urgent attention; but will raising the tax on winnings, or even keeping it at its current 10% really the way to go?
Indeed, if the government increases the tax to 50%, betting would become potentially less attractive, and the gambling rate could go down significantly.
But it could also push desperate bettors to go in search of offshore betting sites that wouldn’t tax their winnings. This could also force legitimate operators out of the country.
There is a balancing act that needs to be considered here. While the government wants to control the rate of gambling and protect its citizens from addiction, it also doesn’t want to lose out on revenue that would come in from the industry.
The tax laws do need to be reevaluated, but like Ayodele mentioned earlier in this piece, the better option may be tax betting stakes and not winnings.
While bettors would naturally frown at any form of taxation, it feels more beneficial for all parties if stakes were taxed as against winnings, particularly if the government utilises the money recouped from betting stakes to improve the economic conditions of the citizens.
So rather than lose all the money to their betting operators, a fraction of the money would go to the government, which would then be returned to the people in the form of economic and infrastructural benefits.
The indications are that the new regime is moving towards removing the withholding tax, with newly appointed acting head of the Gaming Commission of Ghana, Emmanuel Sisi Quainoo suggesting this much in a recent address to industry operators.
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