Defiant MPs pick top team for tax battle

Members of Parliament on Thursday demanded a payrise and adamantly refused to comply with an order to pay tax.

A meeting called by the Speaker, described as “stormy” and “heated”, appeared to escalate the row between Parliament and the Kenya Revenue Authority (KRA).

KRA has slapped a Sh130 million fine on MPs for late payment of income tax and demanded Sh450 million in arrears in a letter to the National Assembly. (Read: Taxman demands Sh580m from MPs)

“To be honest with you, that letter will not be complied with. We don’t believe in it. The general direction was that the letter should not come to us,” Joint Chief Whip Jakoyo Midiwo told journalists after the morning meeting.

Last year, MPs were assured by the political leadership and the Attorney-General that this Parliament would not pay tax and KRA would not demand it.

But the Constitution is clear, everyone must pay. Even though MPs are arguing that enabling legislation is required to facilitate their payment of tax, they seem to acknowledge that theirs is a lost cause.

Which is why attention has shifted to demanding the implementation of the Akiwumi report recommending that their salaries and allowances be increased to cushion them against the tax burden.

They also established a 15-member committee of ministers, assistant ministers and MPs to come up with a unified response to the demand letter.

“As far as I’m concerned now, the issue at hand is whether the Akiwumi report should be implemented,” said Joint Whip Johnstone Muthama.

Mr Muthama argued that since the report was prepared by an independent commission, Parliament would have no option but to implement its recommendations.

“When Akiwumi went out there, he wrote what Kenyans, you people, said. You said since we elected our MP, he does not attend funeral contributions, church contributions and harambees and Akiwumi filed all those and said this is what we should do,” he added.

The report proposes that MPs’ pay be increased to Sh1.1 million a month, from Sh851,000.

It is understood that Vice-President Kalonzo Musyoka was put under pressure to explain why he had gone ahead to pay tax publicly and he explained that he did so due to public pressure.

Several MPs are understood to be making private arrangements to pay arrears, but the majority appear stuck with the decision not to pay.

Mr Midiwo and Mr Muthama indicated on Thursday that the letter by the Attorney General last year that assured MPs they will not have to pay taxes immediately has become irrelevant.

Mr Midiwo, however, spoke with some bitterness as Parliament largely feels KRA was not honest in refusing to honour the gentleman’s agreement not to demand tax on their allowances.

He said that since the promulgation of the Constitution, the government should have brought the revised National Assembly Remuneration Act, the Income Tax Act and the Parliamentary Service Pension Act to Parliament.

The first one would result in an increase in MPs’ pay as per the Akiwumi report, the second to revise the tax rates and the third to enable former MPs get at least $1,000 (Sh94,000 at Thursday's exchange rate) per month as pension.

“Those Bills are not there and the Commissioner of KRA is imagining his own law. KRA is being given powers it does not have. KRA should collect the tax according to the law and we shall give KRA that law. We have decided to develop that law,” Mr Midiwo said.

The demand for taxes by the KRA is based on its interpretation of Article 210 of the Constitution, which stipulates that everyone must pay tax.

Lawyer Paul Muite has argued that since the National Assembly Remuneration Act is inconsistent with this Article, the recommendations of the Akiwumi Commission are illegal.

Pay up the arrears

In a letter to the Clerk of the National Assembly dated August 3, KRA gave the Parliamentary Service Commission a 30-day deadline to deduct and pay up the arrears.

Mr Muthama argued it was normal for taxpayers to receive such letters and it would now be upon Parliament to reply, thus the creation of the 15-member committee.

The committee comprises ministers Dalmas Otieno (Public Service), James Orengo (Lands), John Michuki (Environment), Naomi Shaaban (Gender) and Uhuru Kenyatta (Finance).

It is understood that Amos Kimunya (Transport) was rejected on the basis that he initiated the taxation idea when he was Finance minister.

Assistant ministers on it are Margaret Kamar (Environment), Joseph Nkaissery (Defence) and David Musila (Defence).

MPs on the team include Mr Midiwo, Charles Kilonzo, Isaac Ruto and Rachel Shebesh.

The committee is expected to issue its report next week, said Mr Midiwo.