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"id": 180330,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/180330/?format=api",
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"type": "speech",
"speaker_name": "Prof. Saitoti",
"speaker_title": "The Minister of State for Provincial Administration and Internal Security",
"speaker": {
"id": 205,
"legal_name": "George Muthengi Kinuthia Saitoti",
"slug": "george-saitoti"
},
"content": " Mr. Temporary Deputy Speaker, Sir, I am happy to second the Finance Bill which has been moved by the Minister for Environment and Mineral Resources. Mr. Temporary Deputy Speaker, Sir, the Finance Bill is an extremely important regulation in the sense that it is the one that anchors, legally, measures that the Minister for Finance makes at the presentation of the Budget. It is important that this Bill be presented to this House, as has been done, before the 31st of December. The taxation levied by the Kenya Revenue Authority (KRA) is only up to the 31st December, 2008. If this Bill is not passed and becomes a law, then come January, the KRA or the Government would not have legal authority to raise revenue. Without revenue, the Government would not provide the services which it is supposed to provide to the people of this country. Mr. Temporary Deputy Speaker, Sir, it is true to say that given the events of the prevailing situation, as a result of the post-election violence, the Finance Bill was formulated against a very difficult and hostile economic environment. This is because at that particular time, one could see clearly that the economy was not going to grow. One could never be sure whether there was not going to be capital flight or whether the productive sectors, like agriculture, were going to recover as soon as possible. Again, other events took place thereafter. Indeed, one of the most serious one has been the financial crisis in America that spread to Europe and South East Asia. Mr. Temporary Deputy Speaker, Sir, it is a tribute to the financial authorities, especially the Ministry of Finance and Central Bank of Kenya (CBK) that even after the prices of oil rose to unprecedented levels, the financial crisis in the world came up and claimed the collapse of a number of very strong financial institutions and banks in the world. To a certain extent, we have been insulated. I think it is true to say that to the extent that the financial crisis in the world was affecting the banks, which are bound by a number of factors, primarily the over-lending, especially on the mortgage front, and using the instrument that they call the derivatively?. Fortunately our banks are not too exposed to the international financial system. Our banks have not lent to other banks outside the country, like in the United States of America (USA). If anything, we have borrowed. Therefore, had we lent resources to those banks in the USA, their collapse would have affected our banks. Fortunately, we are in a much better situation. Mr. Temporary Deputy Speaker, Sir, the other thing, which is important, is that revenue will continue to grow but not so much as would have been the case, because of the international environment. I believe that revenue will continue to be raised, because the Kenya Revenue Authority (KRA) has demonstrated that it has been able to develop its own capacity to raise revenues. More importantly, it is the willingness of the Kenyans now to pay their taxes. It is a well- known fact internationally that the key thing in raising revenue is not to over-tax people. If you over-tax people, then they end up looking for other ways to evade the taxes. But when you tax people at a level which they consider to be fair, then they voluntarily pay their taxes. Given the fact that there has been gradual adjustment from time to time to make sure that November 11, 2008 PARLIAMENTARY DEBATES 3353 there is adjustment within the prevailing conditions, our taxation rates are not that high in comparison to the world taxation levels. That is what has made it easy for Kenyans to meet their obligations. That does not mean that there are no errors, but, generally, Kenyans have come to realise the rationale behind paying taxes. More importantly, they understand that the taxes enable the Government to provide services in all areas. Mr. Temporary Deputy Speaker, Sir, I want to commend the Minister, especially on the suggestion on how to address the challenges that have emerged in the Capital Markets Authority (CMA) and the Nairobi Stock Exchange (NSE). It is true that we have seen a number of brokerage firms collapsing when they are not able to pay the investors their money. That has created anguish among investors. The Minister has stated that he does intend to move some amendments at the Committee of the Whole House stage to ensure that there will be discipline in the trading in stocks at NSE. That is fairly commendable, because a number of people have actually lost their own investments as a result of the collapse of a number of brokerage firms. I have been wondering what the Government was going to do. The good news is what the acting Minister for Finance has stated. I hope that we will pass those amendments because investors must be protected. If there is no confidence in the stock exchange, the investors, both local and foreign, will not invest. Perhaps, that fear explains why the value of the shares in NSE has been eroded. I would not want to attribute that erosion, or the decline of the value of the stocks to the lack of confidence. Let us take into account that due to the liberalised kind of economy and the level of returns from shares, a number of foreign investors had invested in our stock exchange. That in itself was extremely good, but at the same time, when the financial crisis set in, in foreign countries, especially in Europe, the USA and the Asian countries, the only way those investors could meet their obligations locally was for them to dispose of their shares so as to be able to raise resources. More importantly, there was global fear that even in industrial economies, shares were declining in value; they did so to the extent that even for very strong banks like Barclays Bank and the LLoyd Bank, the shares went down. Therefore, there have been a global worry about shares. The key thing is for us to ensure that those \"cow boy\" owners of the stock brokerage firms are reigned in. We want to thank the Minister for the proposals on that particular matter. Mr. Temporary Deputy Speaker, Sir, let me end by saying that there are very important measures contained in this Finance Bill. They relate to the zero-rating, as far as Kenya is concerned, in relation to international travel. I think there has been unfair situation in the treatment of Kenya Airways, which is the local carrier, because other airlines have received that kind of benefit, which we are now going to confer upon Kenya Airways. That is going to help us a great deal. It is also important to recognise an extremely good move in terms of zero-rating of the motor cycles. Today, motor cycles have become a very popular mode of transport in the rural areas and small towns. It is cheaper and very convenient. This is in recognition that the common man needs to be assisted by the Government. In the construction industry, there is the lowering of the duty on cement. This is important because there is an expansion of the construction industry; one only needs to look at the type of construction taking place in this country. I also want to thank the Minister for his recognition of our own athletes; they have been able to earn us a great deal of honour. They have performed extremely well internationally. They have been able to sell this country a great deal. Before Mr. Obama became the President of the USA, athletes were the one group that was selling Kenya out there. If our gallant athletes are paid money abroad, it is extremely unfair that they should be taxed here in Kenya. So, the removal of their double taxation will go a long way in encouraging our own athletes to perform better, sell the Kenyan name more and gain resources for themselves. That is extremely important. 3354 PARLIAMENTARY DEBATES November 11, 2008 With those few remarks, I beg to second."
}