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"id": 216581,
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"speaker_name": "Mr. Kimunya",
"speaker_title": "The Minister for Finance",
"speaker": {
"id": 174,
"legal_name": "Amos Muhinga Kimunya",
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"content": " Thank you very much, Mr. Temporary Deputy Chairman, Sir. Let me take this opportunity to, first of all, thank the hon. Members for their contributions this afternoon. The Chair will agree with me that the quality of debate has been outstanding from the issues that have been raised by the hon. Members who have contributed. Many hon. Members are in support of these proposals. I will only confine myself to the areas that may require some clarification. Mr. Temporary Deputy Chairman, Sir, one of the areas that I believe is being not quite understood is our intention on the Sugar Development Levy (SDL). The SDL, as within its broader sense, has a wider mandate, including the development of the sugar industry in the country. As such, we have not interfered with it. However, what we are trying to do is to look at the impact of the imposition of SDL on the various users and industries. One of those that we identified at this point was the competitiveness of our industries that are using industrial sugar as their basic input. Within the region, it is only Kenya that charges the 7 per cent. Countries such as Uganda, Rwanda, Burundi and Tanzania do not charge this levy. This makes our product uncompetitive. We have removed that tax knowing very well that the impact on the wider Sugar Development Fund (SDF) would be minimal. Also, there is no impact on the locally grown sugar. Locally grown sugar is not being used for industrial purposes. Mr. Temporary Deputy Chairman, Sir, now, when we start growing locally industrial sugar, I will be very happy to extend the same treatment to the locally grown sugar as to the imported sugar. As of now, the only industrial sugar which is being used is imported. Therefore, it does not June 28, 2007 PARLIAMENTARY DEBATES 2153 make sense to gazette that there is a tax break on something that does not exist. So, that is just by way of explanation. I would also want to mention here that there is a wider Government commitment, anyway, to develop the sugar industry in addition to what is happening to the SDF. There is money for infrastructure development, electrification and grants are being pushed on through the parastatals as part of the wider development of the sugar industry. Mr. Temporary Deputy Chairman, Sir, the other point which I just want to clarify, again, is on the Industrial Development Fund (IDF). Yes, we moved it from 2.75 per cent to 2.25 per cent. It may not look like a lot, but when you look at the volume of imports in this country, we are talking of billions of shillings that have been saved. Gradually, we are committing ourselves to reduce that eventually to zero. There are also tax implications. There is some impact on revenue. With the big budget we have this year, and the general elections scheduled to take place at the end of the year, we saw it wise to move in bits and pieces rather than please one group and sacrifice efficiency elsewhere. Mr. Temporary Deputy Chairman, Sir, I want also to mention something about scrap metals. I think that issue came up, that we are only imposing export duty on batteries. What we have done is to bring the export duty on batteries at par with the export duty on the scrap metals. This is basically meant to discourage the export of batteries and scrap metals. When you tie this with the excise duty on the imported second-hand spare parts, we are on the way to starting to give incentives to local manufacturing. I am glad that Prof. Anyang'-Nyong'o did mention about potential revival of the Numerical Machining Complex. We need to give these people incentives. We are moving in the direction where we want to encourage local production of spare parts. However, what has been happening is that people have been saying: \"Look, so long as we have all these imported spare parts coming in, there is nobody who will put up a plant to manufacture spare parts in this country.\" We need to start giving the signal that this country is about increasing our production base. We need to encourage investors to come here and increase the number of spare parts that are being produced locally. In other words, we are sending a signal that we will not be the dumping ground for all spare parts that cannot be used in other countries. These spare parts are being dumped here and they are killing our competitiveness. We all know what happened when we allowed mitumba to be imported duty free. We killed the cotton industry in this country. Mr. Temporary Deputy Chairman, Sir, another thing that was brought to the fore is the claim that we have not addressed the issue of tax thresholds. Now, in 2004, the Income Tax thresholds were addressed. When we looked at the figures, we still believe that any adjustments would not necessarily improve the livelihoods of many people. We have taken the view that we should be spending more money on paying school fees for our children, giving them education, constructing roads, giving them power and so on. Eventually, when everybody is at par, we can start looking at the issue of thresholds, perhaps, in the course of the year. I promised that the study is going on. Mr. Temporary Deputy Chairman, Sir, I believe that those were the main points that were raised and that required my clarification. By and large, I am very happy with the support that hon. Members have given me. I would also like to mention that there is none of these measures that we put in with a view of discriminating between our local and foreign markets. We want to look at issues, rather than who is producing what. The end result will show itself when the measures take impact; that everybody will be a winner whether he is a local manufacturer or a multinational. Mr. Temporary Deputy Chairman, Sir, with those remarks, again, I would like to thank hon. Members for their contribution and support so far. I beg to move."
}