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"id": 216540,
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"speaker_name": "Mr. Oparanya",
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"legal_name": "Wycliffe Ambetsa Oparanya",
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"content": "Thank you, Mr. Temporary Deputy Chairman, Sir. First of all, I want to thank the Minister for Finance for having come up with very good VAT and Income Tax proposals. I want to thank him for the exemption of VAT on non-residential buildings income, June 28, 2007 PARLIAMENTARY DEBATES 2137 reduction of IDF from 2.75 per cent to 2.25 per cent, especially on goods imported from non-East African Community (EAC) countries and removing it completely on goods imported from the East African partner States. I also want to thank the Minister for introducing the Industrial Building Allowance, especially on the low income earners although we will want the Minister to fix the threshold and also reduce or remove the Public Service Licence completely. I hope that with that measure, our public transport fares will go down. The other issue is the removal of tax on monthly pensions. The Minister should have looked at the lumpsum amount that is usually paid when one retires. He has limited himself to only the pension that is payable monthly. Mr. Temporary Deputy Chairman, Sir, despite the good proposals made by the Minister, I have the following reservations. The first one is on the removal of Sugar Development Levy on all imported sugar for industrial use. Every year, the Minister helps coffee, tea and pyrethrum farmers, but he has always tried his best to frustrate the sugar-cane farmers. Last year, the Sugar Development Levy was introduced but its levying was transferred from the consumer to the farmer. Subsequently, an amendment was done on the Floor of this House. The Minister has not forgotten what he did last year. This year, again, he is removing Sugar Development Levy on all imported industrial sugar. The Minister knows very well that since the Government has not helped the sugar farmers, they have been using the Sugar Development Levy for development of the infrastructure within the sugar sector, and even modernising the factories. I implore the Minister to make amendments, so that the status quo remains. Even local sugar companies sell the sugar that they produce here to some of these industries. So, it will mean that imported industrial sugar will be cheaper than that produced locally. Mr. Temporary Deputy Chairman, Sir, as you know, water is a problem in the rural areas. People in the rural areas are forced to boil water before they drink it, because of the upsurge in water-borne diseases. The Minister has now introduced a levy of Kshs6 per litre of bottled water. Obviously, this makes bottled water more expensive. Another issue I would like to talk about concerns cigarettes. This issue also arose last year. The world over, cigarettes are now being taxed based on ex-factory prices. However, the Minister has now introduced a tax, re-organising that industry. He is now taxing cigarettes using the characteristics of the cigarettes. Uganda and Tanzania are using the ex-factory price as their tax base. This means that cigarettes in Kenya will be more expensive than in Uganda and Tanzania, and that will make smuggling possible. The prices of that commodity here being higher than in the two countries, and since we are in the same Customs Union with those two countries, cigarettes will be smuggled into Kenya from Uganda and Tanzania. That might kill our tobacco industry. Instead of the Minister raising the revenue he wants, his revenue will go down. Mr. Temporary Deputy Chairman, Sir, the other issue is the introduction of 20 per cent Excise Duty on second-hand motor vehicle spare parts. I know that this measure has been introduced all over East Africa. However, the roads in Uganda and Tanzania are better than in Kenya. So, since we have not been able to rehabilitate our roads, it would have been better for the Minister to postpone imposition of the 20 per cent Excise Duty on imported second-hand motor vehicle spare parts until the roads are done. Looking at the Financial Statement, the Minister has proposed to finance the deficit of Kshs116 billion by selling some shares in some parastatals. He is using capital receipts to finance a deficit. My question to the Minister is: If you are using capital receipts, what will happen in future when you have sold all the parastatals? How will you finance deficits in future? This is not the best way to finance Budget deficits. 2138 PARLIAMENTARY DEBATES June 28, 2007 Mr. Temporary Deputy Chairman, Sir, the Minister came up with quite a number of tax proposals in the last Budget. Unfortunately, he never explained how the tax measures he introduced last year enabled him to realise his revenue target, what were the shortfalls and how he managed to deal with those shortfalls. Year in, year out, we approve tax proposals but thereafter, we are not told how those proposals were implemented. With those few remarks, I beg to support except for the reservations that I have mentioned."
}