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{
"id": 216548,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/216548/?format=api",
"text_counter": 113,
"type": "speech",
"speaker_name": "Prof. Anyang-Nyong'o",
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"speaker": {
"id": 193,
"legal_name": "Peter Anyang' Nyong'o",
"slug": "peter-nyongo"
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"content": "This is the basic tension here. Therefore, the Minister's taxation proposals are contradictory. Granted that the Economic Recovery Strategy (ERS) has largely succeeded minus certain very important measures which were not taken; which I do not want to go into now, for obvious reason- -- But then, if the ERS has succeeded and we want to go beyond it, we must be as brave as NehruMahalanobis and get into a great leap forward. We cannot get into a great leap forward without being brave about supporting domestic production of factor inputs. Mr. Temporary Deputy Chairman, Sir, we will not support domestic production of factor inputs, if we implement these proposals to tax second-hand spare parts. We are only going to expand domestic factor inputs if we invest in the spare parts industry. Rather than encouraging investment in the spare parts industry, we want somehow to protect the industry by penalising the import of spare parts. What, yesterday, I called kalongolongo economics. We are not going the big June 28, 2007 PARLIAMENTARY DEBATES 2143 way. We are only pretending to go the big way. Mr. Temporary Deputy Chairman, Sir, we have the Numerical Machines Complex which was a major investment in this country. However, it has been lying idle for decades. It has a potential to support the general engineering in this country to produce spare parts. I would rather you had a taxation measure to encourage the rehabilitation of that facility rather than engage in some little spare parts coming from Tanzania, Uganda and I do not where! Mr. Minister, you have to be brave and go a great leap forward in an expansionist economy with the support of the domestic production of factor inputs. That is the kind of thing that Mr. Kirugi M'Mukindia has been talking about. Mr. Temporary Deputy Chairman, Sir, if there is anything to be protected from coming into this country, it should not be spare parts. It should be non-essential consumer goods. One of the reasons China is where it is today, is because under Mao, for a very long time, it reduced consumption. It stopped people from engaging in non-essential consumption. In China, they were very stiff, everybody was wearing the Mao tunic; which I am trying to introduce to this country, but very painfully. There was a reduction in the consumption of excessive wear. Now, that is the kind of thing that we need. Today, you go into the streets and find somebody selling some trinkets from China, of course, imported through Dubai. They are completely non-essential. They fill our supermarkets. We spend a lot of money on them, but when you look at their utility in encouraging the production of factor input in this country, nothing! I would rather we went that way than penalising an area of the economy which will not help us at all. Mr. Temporary Deputy Chairman, Sir, the other thing that needs to be done in our Budget-- - The other day, you talked about investing in infrastructure. In my opinion, to rehabilitate roads in this country, as we said in the year 2003, you need Kshs101 billion and not Kshs66 billion. The amount of Kshs66 billion is peanuts. Again, that is why I call it kalongolongo economics because you are putting too little money in something that needs a lot of money. You could raise that money by encouraging build- operate-transfer and give tax rebates to those who can go into build- operate-transfer in rehabilitating infrastructure. That will be an expansionist economy. But at this point in time, there is too much shyness in taking taxation measures which will lead us to a great leap forward in this country. The other important thing that I think the Minister could have done in these taxation proposals is in the rehabilitation of vital industries. I have already mentioned the Numerical Machine Complex (NMC). But if you go down the history of this country, once we were hit by the Goldenberg in the 1992, and we had to pay up to 86 per cent interest on Treasury Bills, not only did we have galloping inflation, but industries went crushing down in the Industrial Area. So many good industries in this country went berserk. Take for example the Imperial Industry of East Africa. It had a major industrial base for development in this country. It could not sustain its bank loans and it was closed down. The best thing we can do, if you are going to go beyond the economic recovery strategy into an expansionist economy, is to say: \"Let us take taxation measures which lead to rehabilitation of vital industries in this country.\" Let me give you an example. The example is with regard to the measure to tax sugar by saying you will remove development levy on imported sugar destined to industries. Mr. Temporary Deputy Chairman, Sir, let me inform you. Miwani Sugar Industry was the only industry in this country which produced white sugar for industrial consumption. But Miwani Sugar Industry went under because of corruption. Let us call a spade a spade! What it needs is only Kshs360 million to be rehabilitated. That is something that is worth doing if, indeed, it is going to be part and parcel of having factor inputs into our industrialisation. It is not a price too big to pay to produce industrial sugar domestically, rather than encourage industrial sugar coming from outside into the country and penalising sugar farmers by giving tax relief in the name of development levy 2144 PARLIAMENTARY DEBATES June 28, 2007 to those importing and yet, people down here are paying domestic development levy. Mr. Temporary Deputy Chairman, Sir, we need the Sugar Development Levy to do three things. One, to support research in the sugar industry. Two, to finance co-generation in the sugar industry, both in terms of research and products to be produced. When I was the Minister for Planning and National Development, I took two managers of sugar factories to Cuba. The manager of South Nyanza Sugar Company (SONY) and the Manager of Chemelil Sugar Factory. I made arrangements with the Cuban Government so that they could go and see co-generation in Cuba practically, and how all kinds of by-products are made from sugar. We visited an industry which was producing all range of alcohol beverages. Then, we followed those alcohol beverages to where they were being used to manufacture pharmaceuticals in Cuba. Sugar is not only made from cane. Sugar can be manufactured from all kinds of sweet things. Kila kitu kitamu, isipokuwa kile! So, we need to understand that we can manufacture sugar from maize, rice, coffee, deep roots, bananas and all kinds of things. So, if we had a forward looking expansionist economy and want to build a strong sugar industry, we will not confine ourselves to cane sugar and, therefore, be very myopic on the kind of taxes we levy on things that come here destined for industrial sector. We would encourage the production of industrial sugar from other things, so that the economy as a whole can be sugar-based. Then, we shall understand that factor inputs in pharmaceutical could come from sugar. Mr. Temporary Deputy Chairman, Sir, that is the kind of economy that we want in this country. If we are going to have this economy, then we have to have taxation regime that encourages that economy to grow. We must not be shy because the kind of measures that the Minister has put here in terms of taxation assume that the present economy is the one to be milked. He does not see the coming economy as the cow to be milked and, therefore, it should be encouraged to grow by certain taxation measures that encourage it to grow. Finally, let me come to my third subject - infrastructure. I still hold the World Bank culpable for discouraging the Kenyan Government from building a dual carriageway from Mombasa to Busia, because of wrong assumptions on what needs to be done to build such an infrastructure. If those assumptions are being made here, they will keep us down. They will not make us make the great leap forward into an expansionist economy. With those few remarks, I beg to support."
}