Move to block MPs’ greed for higher pay

Top public officials on Monday put up a fight to block a pay increase for MPs and end legislators’ tax holiday.

Kenya Revenue Authority boss Michael Waweru and Head of Public Service Francis Muthaura appeared before the tribunal set up to review MPs’ salaries and argued that it was wrong for MPs not to pay taxes like other Kenyans.

They proposed that some of MPs’ allowances — extraneous and travel allowances — be scrapped, while mileage and entertainment allowances be lumped together with their basic pay and taxed.

Mr Waweru suggested a novel way to force MPs do their bit: An amendment to the National Assembly and Presidential Elections Act to require all candidates to have a Tax Compliance Certificate before they are cleared to run in elections.

MPs had no excuse for not paying tax, “even if the law exempted their allowances from being taxed,” Mr Waweru said.

“I don’t think that just because someone is used to a lifestyle, then we should not tax them... there is no harm in trying to force MPs to pay tax,” the KRA boss told the tribunal.

Quoting the example of a 2.5 per cent tax imposed in the 1990s to help buy famine relief, the Mr Waweru said the taxation of MPs’ allowances would be a “good contribution” to the economy given the current slowdown.

He said taxation was “a nuisance and painful to everyone” so the argument by MPs that applying tax on their allowances was like changing their employment contract midway does not hold any water.

“Nobody is asked whether they want their salary taxed,” he said.

In submissions to the tribunal sitting at the Kenyatta International Conference Centre, Mr Muthaura proposed that the current salaries of MPs and parliamentary staff remain as they are.

This, the civil service boss said, was because the current economic trends “may not allow the exchequer to support increased salaries for MPs.”

Currently MPs earn a minimum salary of Sh850,000, but pay a tax of Sh53,000 on the basic salary of Sh200,000.

Mr Muthaura proposed that the Vice-President and the Prime Minister draw equal salaries and be entitled to similar retirement benefits.

In the unlikely event that MPs accept the tax proposals, which will also affect other constitutional office holders like judges and the Attorney General, then the Treasury will have an additional Sh670.1 million a year. This is enough to build 2,000 classrooms.

It is likely that the government will include a taxation clause in this year’s budget after it was defeated last time.

The KRA boss hinted as much: “MPs are running out of reasons why they should not pay tax on their allowances.”

He said only two MPs, Kangundo’s Johnstone Muthama and another who was not named and one assistant minister are remitting an additional Sh206,000 as tax on their allowances.

Planning assistant minister Peter Kenneth is on record as one of those submitting tax on allowances to the KRA. The other MP is Ndaragwa’s Jeremiah Kioni although the Nation could not independently confirm if indeed he was the one that the KRA boss was talking about.

Mr Muthaura proposed that the salaries of parliamentary staff “be harmonised” with those of other civil servants “to allow the Treasury to easily manage salary administration.”

Economic growth forecasts have been scaled down from a 10 per cent growth forecast to a modest six per cent in 2012.
This, Mr Muthaura said, was due to the effects of the post-election chaos and the global financial crisis whose impact, the government has warned, would be felt in the coming three months.

The Public Service boss called for the allowances of parliamentary staff to be reduced so that “they are not pegged on salaries as is the practice now, but on a reasonable fixed rate as applied to other public servants”.

He said the Parliamentary Service Commission had “distorted” the salaries in the public service, by paying its staff “huge salaries and allowances” and there was no need for an upward review at the moment.

“The current salaries are too high; we need to hold them at that level for longer periods until the economy improves and the salaries of the other public servants have been fully harmonised,” Mr Muthaura said.

He gave the example of the Clerk of the National Assembly who earns more than a permanent secretary after the implementation of the 2002 recommendations by the Cockar report “when they should be earning the same”.

According to Mr Muthaura, a kind of “competition” on pay among the Teachers Service Commission, the Judicial Service Commission, the Public Service Commission and the PSC had led to a “huge pay bill”, hence the need for a single independent body to deal with civil servants’ salaries.

He asked the tribunal to propose a “Salaries Commission”, as an independent body, which would set up the salaries of all public servants, including MPs.

Judge and jury

“You cannot be the jury and the judge in deciding your pay,” Mr Muthaura said in reference to the current practice where MPs determine their own pay.

The tribunal, chaired by retired appellate judge Akilano Akiwumi, is looking into MP’s salaries and whether they should pay taxes.

Mr Muthaura asked the tribunal to be “a bit more creative in how they handle these things” to avoid antagonising MPs so that they don’t reject its report.

On the pension to be paid to MPs, both Mr Waweru and Mr Muthaura agreed that it was important for the lawmakers’ to earn a good pension.

However, Mr Waweru said the MPs should “understand the difference between taxable salary and pensionable salary.”