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"id": 237453,
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"speaker_name": "Mr. Wambora",
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"speaker": {
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"legal_name": "Martin Nyaga Wambora",
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"content": "Thank you, Mr. Temporary Deputy Speaker, Sir, for giving me the opportunity to contribute to this debate. May I start by commending the Government in general, and the Ministry of Finance in particular, for the very prudent fiscal and monetary policies they have developed. At the same time, I would like to commend the implementing agency of those policies - the Kenya Revenue Authority (KRA) - for its very effective operations. That is why we are enjoying an additional revenue collection of more than Kshs100 billion, which could not have been realised by previous regimes. Mr. Temporary Deputy Speaker, Sir, having said that, I would like to go straight to the issue of taxation and start with the issue of Capital Gains Tax, which has now been re-introduced October 31, 2006 PARLIAMENTARY DEBATES 3255 after many years. Personally, I feel that this was a mistake because, property owners were already being over-taxed through Income Tax and Stamp Duty. To me, that is quite adequate. It is a fact that we have a big shortage of housing units, and more so low cost housing units, in this country. With the introduction of this tax, we will not be able to meet the demand for housing in this country. This new tax makes it more difficult for property developers and property owners to put up more units. Therefore, I would like the Minister to consider doing away with this tax all together, so that we can proceed in the manner we have been doing. The boom that we have realised in the property industry has been as a result of the non-existence of the Capital Gains Tax, and the prudent policies that have been in place. However, the Minister has now put a spanner in the works, and that will spoil everything. The second issue that I would like to talk about is the additional tax the Government has introduced on petroleum fuel, which was intended to fill the revenue gap created by the abolishment of the road licence fees. Again, I think we have replaced a very straightforward form of taxation, which was easy to apply and which was also very equitable. Previously, if you had a bigger vehicle, you would pay more money. If you had a small vehicle, you would pay less. The poor person, who had no vehicle, was not taxed. That is what we call equity in taxation. The Government has now replaced that equitable taxation measure with an inequitable taxation measure by increasing the tax on petroleum fuel, which is, in fact, inflationary. This measure hurts the poor more than the rich, because the poor now pay the same amount of money as rich people. There are multiple negative effects of this taxation measure on the economy from a rise in the costs of production and service delivery. We have seen that clearly in the transport sector. The cost of travel by public service vehicles (PSVs) has increased significantly as a result of this additional tax on petroleum fuel. We have also seen that the energy sector has also been affected. I do not oppose that proposal, but I would like the Minister to explain to me, in simple terms, when he replies to this debate, why he wants to approve all this. As we are all aware, we are now forming the East African Community. Therefore, to require the Minister to approve such moves by financial institutions is not appropriate. I think the Minister should just be informed of such an intention. In the recent past, the Kenya Commercial Bank (KCB) opened a branch in Southern Sudan. The same bank has also established a branch in Tanzania. Why would we want to introduce another level of bureaucracy by requiring banks to seek approval from the Minister whenever they wish to establish branches outside Kenya? Probably, the Minister owes me, if not this House, an explanation as to why he wants companies to go through such a process. In my view, a bank just needs to inform the Minister of its intention to open a branch outside this country after satisfying itself that it is doing well in Kenya. Mr. Temporary Deputy Speaker, Sir, if I heard the Minister right, he has withdrawn the requirement that insurance brokers should deal with only a maximum of three insurance companies. I am happy he has done so. We are now operating in a free market economy. Therefore, insurance brokers should be allowed to deal with as many insurance companies as they can. We cannot be restricting businesses in some sectors and giving a free hand to companies in other sectors. I am happy that the Minister has acceded to the argument that introducing a sugar-cane levy would increase the production costs of sugar-cane, and thus erode the farmer's earnings. The Minister has finally seen the essence of encouraging the growth of agriculture in this country. Therefore, the withdrawal of the sugar-cane levy is, indeed, welcome. Mr. Temporary Deputy Speaker, Sir, while agreeing with the proposal to have the receiver of revenue retain some of the repayments, I would like this to be done in consultation with the Minister. A receiver of revenue cannot, at the stroke of a pen, reduce the amount of money from repayments. There should be some kind of consultations with the Treasury, so that whenever the receiver of revenue retains the money, the Treasury will be informed. 3256 PARLIAMENTARY DEBATES October 31, 2006"
}