Construction of Rosslyn Riviera Shopping Mall in Ruaka last December.
MPs say abolishing building levies ill-advised. FILE PHOTO | MARTIN
MUKANGU
By NEVILLE OTUKI, notuki@ke.nationmedia.com
In Summary
- House Committee reckons that removing the construction levies will force Nema and the National Construction Authority to fully rely on the Treasury to fund their surveillance operations.
- Contractors used to pay a fee of between Sh10,000 and Sh40 million to Nema for environmental audits depending on the risk levels of their projects.
Parliament has criticised a Cabinet directive
scrapping construction levies, arguing it will shift the burden of
funding building and environment watchdogs from rich investors to
taxpayers.
The parliamentary Budget and Appropriations Committee
reckons that removing the construction levies will force the National
Environment Management Authority (Nema) and the National Construction
Authority (NCA) to fully rely on the Treasury to fund their surveillance
operations.
The Cabinet last month scrapped the levies to lower project costs and sharpen Kenya’s competitive edge.
“The scrapping of the environmental impact
assessment (EIA) fees which used to be paid to Nema amounts to Wanjiku
subsidising the private sector,” the MPs say in a report.
Contractors used to pay a fee of between Sh10,000
and Sh40 million to Nema for environmental audits depending on the risk
levels of their projects.
Additionally, projects exceeding Sh5 million
attracted a levy of 0.5 per cent of the value of the contract which was
paid to the NCA before the developers could start work.
The lawmakers are now of the opinion that the fee removal is set to pile another layer of burden on taxpayers.
“The problem is further exacerbated by a lack of
regulations requiring businesses to deposit an environmental performance
bond that would have been used to rehabilitate any potential impact to
the environment,” the MPs say.
In October, parliamentary Environment and Natural
Resources Committee also warned that the move to scrap the levies would
hurt Nema operations.
This came after private investors, through the
Kenya Private Sector Alliance, lobbied President Uhuru Kenyatta to
abolish the charges.
The Mining ministry in 2014 started collecting a
two per cent royalty on construction materials — increasing the cost of
quarry stones, concrete blocks, hardcore, ballast and sand. This is on
top of the county approval fee which is levied based on the size and
cost of a home.
“Multiple charges levied by various ministries,
departments, agencies and county governments on the construction
industry have contributed to the increase of costs in the sector and led
to inordinate delays in obtaining requisite approvals,” said a
statement from State House abolishing the charges last month.
“Overlapping services will now be performed by the ministry, department or agency best suited to offer the requisite service.”
Treasury secretary Henry Rotich in June scrapped
the Nema audit fees and building levy on projects to spur investments in
the construction sector.
But this failed to take effect. It is up to the relevant ministry to discuss with Nema and then
come up with a Bill. Once this is done, I expect it to be included in a
Miscellaneous Bill,” Mr Rotich said earlier.
“It is a sector Bill and so I couldn’t include it in the Finance Bill.”
The agencies that collect the fees have in the past argued that the Treasury had approved their budget, including the levies
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