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{
"id": 1511298,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1511298/?format=api",
"text_counter": 374,
"type": "speech",
"speaker_name": "Hon. Kuria Kimani",
"speaker_title": "",
"speaker": {
"id": 13435,
"legal_name": "Francis Kuria Kimani",
"slug": "francis-kuria-kimani"
},
"content": "In light of these considerations, while the proposed taxes may generate additional revenue for Government, they also risk undermining foreign investment inflows, market stability and economic growth. As Members of Parliament, it is crucial to carefully assess the potential implications of these measures and balance revenue objectives with the need to maintain a conducive environment for investment and development. Consequently, the Committee decided that this amendment needs to be dropped so that we prioritise long-term economic stability and growth over short-term revenue. Based on these considerations, the Committee recommends deleting the proposal to tax interest income and from infrastructure bonds. This decision reflects the need to safeguard investment inflows, maintain market stability and support Government’s efforts to fund critical development projects through cost-effective borrowing mechanisms. Clause 20 of the Bill proposes to introduce Value Added Tax on several aviation and aerospace-related goods and services including helicopters, safe crafts, satellites, sub orbitals, spare craft launch vehicles, direction finding compasses, instruments, appliances for aircraft and various aircraft spare parts imported by aircraft providers and businesses involved in aircraft maintenance. Additionally, it proposes the inclusion of VAT on air ticketing. This imposition of VAT on these items could significantly increase the operation costs for aviation companies, leading to higher prices for air ticketing and making air travel less affordable for consumers. This could negatively impact the aviation sector, particularly in competitive markets where price sensitivity is high. Furthermore, aircraft and repair business which rely on imported specialised parts could face high input costs leading to increased maintenance fees and potentially reduce investment in business expansion. This added tax burden could also lead to delays in maintenance schedules, compromising the safety and reliability of the aviation sector. The introduction of VAT on spacecraft, satellites and launch vehicles may deter investment in Kenya's emerging aerospace sector which requires significant capital. The volatility of this particular sector and the fact that if you want to repair your plane you can easily fly to a neighbouring country and repair it made us realise that putting this VAT could really cripple that particular sector and make us unattractive as an investment destination. The intention to impose VAT on these goods is, therefore, rejected. This Committee will be proposing that we drop that particular VAT. The Bill is proposing to impose 25 per cent excise duty on coal or Ksh27,000 metric tank or whichever is higher. Whereas there is need for environmental conservation, considering that coal is a very hazardous product in the environment, there is need to re-look the rates that we need to apply on this particular product. Increasing excise duty on coal would have a potential to increase the cost of cement, and in addition, cost of energy because most of the huge manufacturers use coal as a source of energy, and therefore this is one of the amendments that the Committee will be hoping to bring to the Floor of the House. The Bill is also re-introducing Rail Development Levy, increasing it from 1.5 to 2.5 per cent. The Committee notes that this represents a 67 per cent increase in levy which will significantly raise the cost of goods and services that rely on rail transport for distribution. The increase in this levy is likely to have a cascading effect on the prices of goods and particularly in industries that rely heavily on rail freight such as manufacturing, agriculture and construction. Again, realising the need to raise revenue to fund our expansion, it is important that this House considers reducing this. The Committee will, therefore, be proposing to increase this Rail Development Levy not from 1.5 to 2.5 per cent, but to 2 per cent. As we deliberate this Tax Amendment Bill of 2024, it is also crucial that we prioritise measures that effectively expand our tax base and enhance revenue generation. This may"
}