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"id": 245326,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/245326/?format=api",
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"type": "speech",
"speaker_name": "Mr. Kimunya",
"speaker_title": "The Minister for Finance",
"speaker": {
"id": 174,
"legal_name": "Amos Muhinga Kimunya",
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"content": " Mr. Deputy Speaker, Sir, I beg to reply. But before I do that, I would like to thank Members for their contributions and the support they have given the policies which the Government proposes to implement during the next financial year. Mr. Deputy Speaker, Sir, listening to Budget Debate, I am very encouraged by the richness in content and the fact that we have concentrated on the issues that were raised in the Budget Speech and there has been very little in terms of extra issues. I also note that in a long time, this year, we have managed to complete the Seven Allotted Days in a consecutive manner, which is again, credit to the Members that we have now taken the business of the House seriously and we have managed to use all the Allotted Days without breaking or losing a day. Mr. Deputy Speaker, Sir, as I stated during the Budget Speech, this Budget was premised on the three pillars of the Economic Recovery Strategy which is promoting economic growth. Basically, what we are aiming to do there is lifting all the boats together as the tide rises since as the tide rises all the boats at sea rise together. The second pillar is the social injection of funds to lift those who are not on the sea to ensure that we can lift everyone, especially those at the very bottom. That is why we are injecting over 60 per cent of the funding to support health, education, infrastructure, water and roads. This will lift those people at the lowest bottom - the poor - to bring them up so that they can rise with the rest. The third pillar is our improvement in governance so that we can ensure that we reduce waste as we bring in the issues that thrive on corruption. Mr. Deputy Speaker, Sir, I now wish to just touch on a couple of issues that Members raised that I thought I needed to clarify. By and large, I believe Members have been in total agreement with what we have said. I just want to spend a couple of minutes in just clarifying some of the issues that might have caused confusion. The first one is on the zero-rating of VAT on wheat flour. Contrary to what I have been hearing on the Floor, zero-rating of VAT on wheat flour is actually bringing it into parity with what we have done with maize flour, milk, LPG and kerosene to ensure that the total burden is removed from the consumer. Now, this has in no way got any impact on the imported wheat or for that matter, any wheat coming from outside. We are not talking of zero-rating duty or removing duty. Whether the wheat is local or imported, we have removed the VAT, and I think that, to me, will now mean there will be more wheat consumption and we should encourage our farmers to grow more wheat because it is cheaper to buy. At the same time wheat flour will be affordable. 1762 PARLIAMENTARY DEBATES June 29, 2006 The other clarification is on the 2 per cent that is charged on Catering Levy. There is some confusion as to whether that was included within the VAT or not. The Catering Levy is additional to VAT. That is specific to the industry, as you know the Catering Levy is charged on people within our hotel industry. It is used to improve the hotel industry. So, that is a levy payable by the industry for improvement of the industry. The reason we have harmonised the 16 per cent is for easier tax administration. We have seen problems between input tax at 16 per cent, output tax at 14 per cent, and we just thought of harmonising everything for that sector. Mr. Deputy Speaker, Sir, hon. Members have raised concern that perhaps the 2 per cent may affect what is happening within that sector. But we have thrown in a lot of tax incentives. There is duty and VAT remission on capital goods that are imported for purposes of refurbishment of hotels. So long as they are used in hotels, there is VAT remission on expansion of hotels. We have also put in incentives in terms of industrial building allowance for hotels and also the amount of money we are spending on promotion of tourism. Mr. Deputy Speaker, Sir, we all have a duty to move on, but the poor state of our roads is increasing the cost of doing business in this country and chasing away investors because they prefer to go to Dar es Salaam, where there are better roads. As the Minister for Roads and Public Works has constantly reminded us we, actually, need more than Kshs100 billion to rehabilitate our roads. We have lost out on ten years of rehabilitation of roads and it is time we accelerated that process. We are trying to increase the amount of money available to rehabilitate our roads not just in towns, but also in each of the constituencies. We have proposed to set aside about Kshs15 billion per annum so that we can reduce the time it requires to rehabilitate our roads from ten years to about six years. It is in this spirit that we are now asking for people to start contributing Kshs3.20 through the 5 per cent increase on the price of fuel. Mr. Deputy Speaker, Sir, I am aware that I asked motorists not to raise fares because we only increased fuel costs by only 5 per cent. Therefore, matatus charging Kshs100 should ideally have increased the fare by Kshs5 only. But we have seen unscrupulous business people in the transport sector increasing fares by between 30 per cent and 50 per cent. I would like to ask hon. Members to show their leadership by censuring the matatu operators for exploiting Kenyans. Let us work together, let us re-energize the civil society and work with the consumer organizations to tell those people that they cannot exploit people on the pretext that the Roads Maintenance Fuel Levy has gone up. At the end of the day, I believe we are all united on this issue that, we want better roads. The Minister for Roads and Public Works has assured me that he has a very detailed programme to make sure that those roads are done. We, in the Treasury, also mentioned that, using our Budget Monitoring Unit (BMU), we are going to monitor how many kilometres of roads are done every quarter on all the roads we have scheduled to be done so that we can come back here and show you that, with the money you gave us, we have been able to do so-many kilometres of road. We do not want to come here and show you that we have just spent the money. Mr. Deputy Speaker, Sir, the other issue which was raised here, and I wish to comment on is the Sugar Development Levy (SDL). The rationale for levying it as a user charge is for that money to be used the way the Catering Levy, Coffee Levy and cess are used to develop that sector. I was encouraged this afternoon when one hon. Member actually brought out the issue that the SDL is collected but it is not benefiting the farmers. First of all, we have brought the rationale to the user, who is the one who contributes to that Fund. If it is a tax, it comes to the Exchequer and then we allocate money for the Fund, but we do not want to go that route. Between now and December, 2006, we are going to sit down with the Minister for Agriculture, because the order takes effect from January, 2007, and we are going to work out the best modality. There have been suggestions June 29, 2006 PARLIAMENTARY DEBATES 1763 that it should be scrapped, while others have suggested that 7 per cent is too high. But 7 per cent is what is being paid out now, and we are going to work out to see how much farmers should pay and how much the Treasury should give as a grant to support that sector. So, we will have come up with a better solution by December, 2006, but things will go on as they are now. In terms of legalities, we now know that the levy is where it belongs. It is not a tax that should be approved by this House, as was happening when it was a consumer tax. Mr. Deputy Speaker, I would also like to comment on the issue of the insurance industry. We have taken a lot of pain to look at what has been happening, for example, why the insurance industry has been crumbling and why they are not even willing to insure private vehicles. This is because in a comprehensive cover, things are sorted out. It is very clear what one is insured for. But in terms of the third-party cover, which is mandatory, it was left loose. We have looked at what is happening at the international level and we have borrowed heavily from them. So, we thought that the best thing is actually to make it predictable for people to know that this is what the insurance company can do or the maximum levels of claims, and the courts will then exercise their jurisdiction within some prescribed limits, which is already the practice with regard to the comprehensive covers and which have been left out in the third party covers. There are so many issues which have been well put. I want to assure hon. Members that as we move to the individual Votes, we will have more discussions. We will throw some more light on issues that hon. Members may raise. As we said, the past is gone. The present is with us. The challenge we have is how to make Kenya a better country for our children and grandchildren. The time to start looking for solutions for the future is now. This House will be privileged to start getting those solutions and laying the building blocks for the future as we move from recovery to making maximum effort to put our country where it should be. Lastly, some hon. Members have raised the issue of donor support for the Budget. I would like to confirm that although we have not included donor funding in our Budget, there is some money from external sources which has been factored into the Budget. While presenting the Budget Speech to this House, I acknowledge that we are receiving up to Kshs29 billion in respect of project grants. We have itemised that money within the Development Estimates in the first few pages for hon. Members to see. We are thankful to the people who are supporting us implement those projects. However, in terms of Budget support, we have realised that if we continue relying on donors, who have become increasingly unpredictable, we will never get anywhere. Mr. Deputy Speaker, Sir, in previous financial years, we factored into our Budget donor support money, but the money was never released to us due to subsequent conditionalities by the same donors. However, we are now operating with total predicability. We only include into the Budget money whose disbursement to us we can guarantee. So, let us not confuse donor support with loans we receive. That is money we will pay back. It is not donation. The only donation component of this money is the interest concession, which we can factor in within our donations. I am very happy with the Kenyan taxpayers, who contribute 96 per cent funding for our Budget. I am also grateful to this House for supporting the Budget. Once again, I thank you very much. Mr. Deputy Speaker, Sir, lastly, I am very encouraged by the response I got from hon. Members following the Treasury proposal to tax hon. Members' personal emoluments. I am glad that we are now agreed to remove the legal impediments that have been denying us the opportunity to pay our fair share of tax to the Government, just like any other Kenyans. I look forward to the Parliamentary Service Commission setting up a tribunal to review this law to enable us pay tax. Mr. Deputy Speaker, Sir, once again, from the bottom of my heart, I wish to thank hon. Members for the enrichment they have given to this debate, and for their overwhelming support. I 1764 PARLIAMENTARY DEBATES June 29, 2006 look forward to, further, receiving their support next week, when we debate other proposals contained in this Budget as well as when we debate the individual Votes, so that we can start the process of implementing this Budget. Mr. Deputy Speaker, Sir, I beg to move."
}