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"speaker_name": "Mr. Wambora",
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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 October 31, 2006 PARLIAMENTARY DEBATES 3257 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 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. Mr. Temporary Deputy Speaker, Sir, 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. Mr. Temporary Deputy Speaker, Sir, if I may now focus on the issue of the Road Maintenance Levy (RML). In fact, I was talking about it a while ago. However, I would like to look at it at a different angle. There is a tendency for the Government to over-rely on the RML. In the recent past, the Departmental Committee on Finance, Planning and Trade toured China, Singapore and the United States of America. We observed that these countries do not over-rely on the RML. It is interesting to note that this country not only uses the RML to maintain roads, but also to put up new roads. We need to decide not to over-rely on the RML. The RML is a good initiative because we use it to maintain our roads. However, we should ask the Minister to apply the new instrument which he introduced in the Budget Speech. This is the Infrastructure Development Bonds (IDB). There is no sign of it being applied to date. I am really concerned about it. We praised him for introducing this very important instrument. A long term bond has been used effectively in other countries. When we visited the states of Georgia, Carlifonia, Texas, Washington DC, and even observed the federal government roads, we saw that they are all built using the Infrastructure Long Term Bond (ILTB). When we visited the United Kingdom in 2004, we discovered that they had changed their policy. From 2003, they do not use the bonds for recurrent expenditure, they use them for capital development. That is the route Kenya should go. It is a fact that by the year 2030, Britain will overtake German because its economic growth rate is overwhelming. They are likely to be second strongest economy in the world. I do not see why we cannot follow these success cases. We must now institutionalise in law the Infrastructure Development Bonds. We must implement them to put up new roads throughout the country. That will be the beginning of development. If we are to achieve the development vision of 2030, we must implement some of these financial instruments. 3258 PARLIAMENTARY DEBATES October 31, 2006 Mr. Temporary Deputy Speaker, Sir, finally, I want to talk about the Rural Electrification Programme (REP). This is a very critical area with very little development. Electric power connection is so expensive such that we are not ready to use the Constituencies Development Fund (CDF) to do so. The transformers, poles and other items are very expensive."
}