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"id": 250431,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/250431/?format=api",
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"speaker_name": "Mr. Okemo",
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"speaker": {
"id": 198,
"legal_name": "Chrysanthus Barnabas Okemo",
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"content": "Mr. Temporary Deputy Speaker, Sir, I support this Motion with a number of provisos. If the intention of the Motion is to reduce the price of oil products, then I have a bit of misgivings because I do not think it will do so. History is full of examples. This House has had to reduce taxes on petroleum products without any impact whatsoever on the prices to the consumers coming down. Therefore, I support the spirit of the Motion, but we have to address ourselves to the mechanisms that we have to use to ensure that besides reducing taxes, how do we ensure that the reduction translates to advantages to the consumer? That is the biggest problem. If you look at the cost of petroleum products, for example, crude oil, you will realise that we have very little control over these prices. We import crude oil and the prices are externally determined. The crude oil is then processed. We cannot influence the price of crude oil unless we do something about the cost of refining. This means that the issue of the refinery facilities must be addressed. Our refineries are some of the oldest and, therefore, the cost of refining is very high. That translates to higher cost of production. Mr. Temporary Deputy Speaker, Sir, then there is the issue of transportation. The oil is refined, processed and transported to the final consumer through the pipeline, road and the railway line. After that, you have to add the overhead costs, the profit margins of all the oil dealers and taxation. If you do that analysis and look at every component of the cost of petrol, then you probably may be doing very little by just reducing taxes. It is a false argument to say that we should not reduce taxes because we are going to affect the tax revenue. It is the same revenue that you purport to use to support the ordinary mwananchi . If you are collecting tax and the money is not being used for the purpose for which it is intended, then you are better off leaving the consumer with that money, so that he has the discretion to spend it. It is just like taking with the right hand and giving away with the left hand. The Treasury will argue that this is going to affect the tax revenue and our ability to finance the Budget. For a heavily taxed population such as Kenya's, it has a better impact on the economic-development and growth if you leave the money in the pocket of the poor person, so that it is available for him to spend. This Motion is well intentioned. It is in the right spirit, but it is not going to achieve the purpose for which it is intended because of those legal omissions. There is no legal framework to ensure that the dealer will reduce the price commensurate with the reduction in the taxes. Mr. Temporary Deputy Speaker, Sir, maybe to help the Treasury, I will go further and say that as a more imaginative way of dealing with the issue, if we reduce the price by Kshs2, we could ring-fence this money and specify for what purpose it is going to be used. So, this House should direct that the Kshs2 that could be reduced or whatever amount that we reduce, will be ring-fenced and can be used specifically for earmarked development projects, even if it means the Constituencies Development Fund (CDF) or whatever it is but that money will go for a particular purpose. Therefore, the Treasury, instead of having the money to spend, that money will be ring- fenced and it will be directed towards a specific project or programme. Mr. Temporary Deputy Speaker, Sir, therefore, I would like, if possible, that we come up with a legal framework sometime in the life of this Parliament. We can have a mechanism that when we reduce tax and the effect of that is intended to profit or benefit the common man, that there should be a legal framework to ensure that, that benefit fully devolves to the consumer. At the moment we do not have such a mechanism and, therefore, I do think that the intention as I said is good. The spirit is good but I do not think we are going anywhere with the 868 PARLIAMENTARY DEBATES May 3, 2006 Motion. It is a good expression of intent. That is all it is, really. If it was, for example a Motion to seek the permission of this House to introduce a Bill, then I think we would be making some progress but otherwise this is just an academic exercise. Thank you very much, Mr. Temporary Deputy Speaker, Sir."
}