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{
"id": 1252712,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1252712/?format=api",
"text_counter": 120,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "Withholding Tax so that we can generate revenue to connect other people to the national electricity grid in our villages, so that they can also get a chance to participate in this sector. The introduction of Withholding Tax has also opened up a national dialogue about digital content creators who came and told us that the Government should give them incentive by reducing the prices of video cameras that they use to generate content. We have taken their views seriously as a Committee and we will endeavour to carry them in our next report. Clause 28 on the proposed increase of VAT on petroleum and Liquefied Petroleum Gas (LPG) from 8 to 16 per cent was a hotly contested issue. When the Committee put VAT on fuel at 8 per cent, that meant that businesses in this sector were always in a VAT credit refund position because they could pay their VAT on input at 16 per cent. However, when they sell this fuel at 8 per cent, it means that there is an 8 per cent difference. That means these businesses have always received credit when they asked for tax refunds. That means taxpayers’ money has been used to finance these businesses because of the disparity between their input tax, which they pay at 16 per cent, and their output tax, which they claim at 8 per cent. It, therefore, creates that particular position. We have agreed that we are going to carry on with VAT on fuel at 16 per cent. On the other hand, we looked at the discussions that we have had about climate change, climate financing, and going green by 2030. We recommend to this House that we adopt other measures that are going to cushion us against the increased cost of VAT and make sure that moving forward, the cost of green energy is going to be way cheaper, therefore, reducing the need for fossil fuels. That is why, for example, we have zero-rated both LPG gas and LPG cylinders. We are not just exempting them from tax. By zero-rating them, we are enabling manufacturers and traders in this business to be allowed to claim their input tax at 16 per cent. That, therefore, means if these proposals are carried on by these businesses, and this advantage is transferred to consumers, we are going to see prices of LPG gas and cylinders go down by 16 per cent. In addition to that, we have reduced other cost elements that comprise fuel such as the Railway Development Levy (RDL) and the Import Declaration Fees (IDF) to around 3 per cent. So, the increase in VAT from 8 to 16 per cent means that the actual increase in the cost of fuel is only 8 per cent. If you deduct the reduction on RDL and IDF, that means that the marginal net increase in VAT on fuel would be around 4.5 per cent. Data from KRA Customs Department has shown that most motor vehicles being imported into this country are hybrid cars because Kenyans are now turning to motor vehicles that do not wholly rely on fuel, but are both semi-electric and semi-fuel. As such, we have given incentives to manufacturers of electric motor vehicles and electric motorcycles so that in the long run, we grow our manufacturing of electric vehicles and motorcycles. We have also zero-rated their charging units. We look forward to being like the United States of America (USA), or the United Kingdom (UK) where most means of transport, whether they are buses or motorcycles, are electric, therefore, reducing the need for fuel. One of the greatest challenges we are facing as a country has also been the depreciation of the Kenyan Shilling against the USA Dollar. The amount of money we are spending per month and per year importing fuel is a point of concern. So, until that time when we can explore our own oil reserves, we have to think about alternative sources of energy that are green, cheaper, and sustainable. It was also interesting to find innovations that have been done by some companies. I would like to give an example of an institution called Koko Networks that makes biofuel. They have innovated stoves and canisters that reduce the cost of safe fuel for cooking at home to Ksh10 per meal. It can cost you around Ksh10 to prepare a meal at home. How much does that cooker and canister cost? Only Ksh1,500. We have seen these kinds of institutions expand across the country. If we continue to incentivise the use of clean energy for cooking, we are going to get away from fossil fuels and reduce the pressure on our imports, thereby leading to The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}