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"id": 237465,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/237465/?format=api",
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"type": "speech",
"speaker_name": "Mr. Okemo",
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"speaker": {
"id": 198,
"legal_name": "Chrysanthus Barnabas Okemo",
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"content": "Thank you, Mr. Temporary Deputy Speaker, Sir. I will make very brief comments on the Finance Bill. First of all, I would like to make an observation that there are a number of clauses that are included in the Finance Bill that should not really be there. This has been a problem over the years. We have, for example, issues to do with insurance. That clause should be deleted from the Finance Bill and taken to the Insurance (Amendment) Bill. We also have clauses relating to the Central Bank of Kenya (CBK) about the creation of a chairman and so on. This is really trying to introduce amendments to existing statutes through the window. This should be done properly. The Central Bank Act should be amended. We should not use the Finance Bill as a bridge to try and do it faster than we would otherwise do. I do not agree with what is provided for in the Finance Bill as far as the creation of the position of a chairman is concerned. Directionally, the world over, central banks are meant to be autonomous and independent. Therefore, that means we must delink the CBK from influence of the Treasury. I have been in the Treasury and I know the amount of intrusion and influence that the Treasury wields over the CBK. I do not, for example, see the rationale for the Minister for Finance to sign an approval for a bank to close, or even for the renewal of a licence of a bank. He should be involved in slightly more important activities than pedestrian things like signing a licence renewal, which is really a routine matter. He should ideally be involved in policy matters. He should be involved in directing whether to increase competition in the commercial banking sector or not, and looking at the overall health of the financial sector. He is moving in the wrong direction. That chairman will be an appointee of the President. The Governor and the Deputy Governor of the CBK are appointees of the President. These three people will be answerable to one appointing authority. They are all in that system. Each one of them, trying to outsmart the other. We can all imagine what kind of a CBK we will have. My suggestion is that this clause be deleted. It should be brought as a substantial amendment to the Central Bank Act. We should look at the entire Central Bank Act and let other amendments be there which try to reinforce the autonomy and independence of the CBK. That is the direction other countries are moving. I do not see why Kenya should be the exception. Mr. Temporary Deputy Speaker, Sir, I do not support the inclusion of the Sugar Development Levy (SDL). Why was the SDL introduced? It was meant to be money contributed by farmers to a fund. That fund would be used by the same farmers to develop sugar-cane farming. A little bit of it was also to be used to maintain sugar factories. At the moment, the farmer is not benefiting from the SDL as it is being administered by managers of sugar companies. Most of the October 31, 2006 PARLIAMENTARY DEBATES 3259 money is actually going into maintenance of factories. There is very little that is actually benefitting the farmer. In my view, the farmer will not lose anything if the SDL is removed all together. It should be removed because it does not benefit the farmer. It is benefitting sugar factories. The sugar-cane farmer is being overtaxed. If we look at the number of taxes that the farmer has to pay, really this is punitive. If we compare that with farmers of coffee, tea and milk producers, we find that the sugar-cane farmer is heavily taxed. In order to try and help the farmer to get a decent return on his investment, some of these taxes must be removed. I would like to suggest that the Sugar Development Levy, rather than being pushed back to the sugar companies and imposed on the sugar consumer, should be removed completely because it has very little benefit to the ordinary sugar-cane farmer. Mr. Temporary Deputy Speaker, Sir, I wish to comment on the Capital Gains Tax. One of the earlier contributors here mentioned that the Capital Gains Tax was suspended about 20 years ago. There was a reason for that. The same reason that applied then has not changed. The Capital Gains Tax on real estate is going to stifle the property market. A lot of Kenyans are struggling to improve their homes. So, once you impose this tax, it is going to stifle the effort of somebody who has a property and wants to sell it in order to buy a better one. In my view, the Capital Gains Tax should continue to be suspended until the property market is fully developed. When I was looking at the provision in the Finance Bill, I found out that the aim is to raise revenue. Surely, the place to raise this revenue is from the stock exchange. It is very curious that the Capital Gains Tax has not been introduced in the trading of shares and stocks, but has been re-introduced on real estate. If you want to help this economy and the ordinary Kenyan, I would rather that the Capital Gains Tax is imposed on stock exchange. All of us will buy shares. We are trading and doing business. If you are in the business of buying and selling properties, then you will have to pay Corporation Tax. It will be reflected in your profit. So, do you want to introduce another tax on top of that? I would really urge hon. Members not to support the re-introduction of the Capital Gains Tax. Mr. Temporary Deputy Speaker, Sir, there is a clause in the Finance Bill that relates to various aspects of the insurance industry. This is something to do with agents and brokers. There is something to do with the period which a broker must take when he has collected premiums to remit the money to the insurance company. Again, this is an attempt by the Minister to introduce amendments to the Insurance Act through the back door. As I said, there is an amendment to the Insurance Act that will be introduced. Why can we not get those provisions away from the Finance Bill and put them in the Insurance (Amendment) Act. I would like to end by saying that overall, the Bill is okay subject to the observations that I have made. One of the speakers here has mentioned that the Kenya Revenue Authority (KRA) should retain the 1.5 per cent which is supposed to be paid to the staff as a result of collecting tax on behalf of the Government. That is not implementable. The rule is that any money that is collected must first go to the Consolidated Fund before it comes out. I would like to tell the Minister that KRA is doing a great job. It needs to be encouraged. I think the Government is not giving as much support to the KRA as it should. If you look at how much the officers are being paid for the work done, you will find that it is less than 1 per cent. The officers are doing a good job. We have seen an increase in revenue, which is good for everybody. Why can they not be encouraged by making sure that every remittance that they make and that goes to the Consolidated Fund, as soon as the money is received, the 1.5 per cent should automatically be paid to them, for them to operate efficiently and effectively. With those few remarks, I beg to support."
}