The recent performances by the Kenyan distance running community in London surprised many. The Kenyan media, Kenyan federation and now Kenya Revenue Authority will be charging a 30 percent tax on their prize money. Justin Lagat, our Kenyan correspondent, wonders if this is fair?
David Rudisha, photo by PhotoRun.net
IS KRA REAPING WHERE THEY DIDN'T SOW?
I cannot guarantee it will work, but while running towards the finish line with a Kenyan athlete, try reminding him that he will be taxed 30% of the prize money by his government and see if he won't lose hope and let you win. I observed this last Tuesday while doing a workout with a group of athletes where one mentioned the taxation topic and got a scolding from the other athletes for doing it at the wrong time, and indeed consequently, most athletes dropped out of the workout earlier than they would have done had they not been reminded of that.
The move by Kenya Revenue Authority (KRA) to tax athletes of their winning and appearance money in races abroad has raised a lot of criticisms and also lowered the morale of the Kenyan athletes. Most of these athletes sometimes come back home poorer than they left the country even after winning in some races. This is because they will still have to pay for their air ticket, their accommodation abroad, tax to the hosting country, some percentage to their managers and also to their coaches. In fact, some times, their managers pity them and let them free from their percentage payments. But now, before all this happens, the Kenya Revenue Authority now needs its 30% share, and then the athlete will be left to ponder how he will be going to sort out the other issues with the remaining amount.
Speaking at the first AK cross country meeting at Ndalat Gaa, the chairman of the athletics governing body in Kenya, Isaiah Kiplagat, assured the athletes that the organization is doing everything possible with the government to ensure that the taxation of athletes is abolished completely.
"When Rudisha broke the world record at the Olympics, and the national anthem was played and the Kenyan flag hoisted, who paid for that service? Even the higher commissioner cannot do that. The ambassadors and diplomats we have can never publicize Kenya the way our athletes have done. We will continue to fight until this taxation element is addressed practically by the Kenyan government", said the chairman.
The CEO of Safaricom, the lead sponsor of the event and a company that has shown much support to athletics in Kenya of late, in his speech also observed that the Kenyan sportsmen are the ambassadors to the country, and that we may spend much money on ambassadors and diplomatic services, but nothing compares to when the Kenyan flag is hoisted in London or in Berlin; which comes as a result of the power and the hard work of an athlete. He however didn't say whether these athletes should be rewarded or taxed.
John Njiraini, the commissioner general of KRA, while on a live interview at a TV station, said that the athletes should be taxed. He said that with any money earned from the countries that have entered into a taxation treaty, then the athletes will still have to pay the difference in case the percentage they pay in taxes to the country in which they win the money is lesser than what they should pay here in Kenya. Any money won in other countries which have never entered into a protocol with Kenya, remains a law that the tax is due, regardless of whether you have paid taxes to that country.
Asked whether he believes that the public is satisfied with how these funds are being used in delivering public services, the commissioner was categorical that it is not in their scope of work to speak about that because the issue of service delivery is for the treasury, and the parliament is meant to make the allocation decisions. "As the tax authority, our primary responsibility is to collect." From this statement, one would wonder whether the decision to tax athletes is widely consulted, and whether the people who made this decision have in mind that there are just two standard stadiums in Kenya, both situated in Nairobi, and that only a few athletes can manage to train in them as they are required to pay some fees to use the facilities, besides needing to live in Nairobi, where life is more expensive, in order to access them. Most of the athletes who are now being targeted to pay taxes are mostly situated in remote places where they train in muddy and impassable roads. The fastest marathoner on earth does not do speed works on a track. I know that for a fact because I visited him recently and he told me how he has been training.
Speaking at the Ndalat Gaa cross country event, Kenya's Olympic team captain, David Rudisha, pleaded with the government to do away with the taxation of the athletes, arguing that athletes pay taxes at the source, they bring the rest of the money to invest here in Kenya where other citizens benefit by getting employed by these athletes. After paying the managers their 15 percent, their coaches and other travel and accommodation expenses, he thinks that if this money will again be taxed here in Kenya, then athletes will be left with nothing to invest.
It remains to be seen whether the Kenyan government will listen to its athletes, who have and continue to market the country.