Kenya: The dilemma in Capital Gains Tax

A capital gains tax (CGT) is a tax on, the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale(capital gains). The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.
The Kenya Revenue Authority (KRA) has defended its decision to re-introduce the capital gains tax saying this is meant to seal evasion loopholes.
THE EXCUSE:
The taxman said the law was merely suspended in 1985 to enable growth in the property market.
In documents filed at the High Court, the authority said reintroduction of CGT is geared towards achieving among other things, fairness in the burden of taxation.
“Horizontal equity relates to where individuals with similar economic circumstances should bear a similar tax burden. Vertical equity requires taxpayers with greater ability to pay a larger tax burden than those with lesser ability,” Mr James Ojee from KRA said.
He said the reintroduction will minimise tax evasion noting that its absence could lead to development of complex schemes to convert income to capital gains so as to avoid paying the tax (which makes sense....for now).
THE TWIST:
Kenya Association of Stockbrokers and Investment Banks moved to court asking that the law be suspended fearing tax liabilities.
They said the Finance Act 2014, which introduced the law on January 1 this year, is a violation and threat to investors, and has created vagueness and uncertainty in the market in regard to charges imposed.
THE DILEMMA:
Prior to 1985, the government used to charge tax payable on net capital gains on transfer of property which included securities.
It was, however, suspended in the same year to encourage investment in the sectors which commands the question; Why was it dropped in the first place and what has changed since then?
MY OPINION:
 I don't buy into the arguments for CGT by the tax man. To me, it looks like KRA are just looking for more money to meet a budget that has a recurrent expenditure of 90%, we are paying a select group of people to have lots and lots of fun
Kenya Association of Stockbrokers should fight this Capital Gains Tax especially on buying/selling of shares tooth and nail with KRA to have it nullified in the courts. CGT is hindrance to the development and growth of the economy. I don't buy KRA statement that it is to seal tax evasion loopholes,while many tax evasions are happening in all kind of businesses. My concerns here are simply towards Shares and not on properties capital Gains Tax.
Maybe its time Kenya learnt from Rwanda. Kagame's administration has used tax holidays and waivers to encourage investors. So far, the Rwandese economy is growing gradually!! Kenya should stop strangling the economy further....its already in ICU!!
This is capital punishment!!!