Kenya MPs and judges on tax notice

Kenya’s tax chief Michael Waweru has issued a notice to Members of Parliament and judges that their perks will soon have to be taxed.

This is the first time, since the promulgation of the new Constitution, that the Commissioner General of the Kenya Revenue Authority put forth his position regarding the taxation of all public officers.

“Everyone will pay tax,” Mr Waweru said.

However, Mr Waweru declined to say when KRA will start taxing the allowances, despite this being the second full month after the new Constitution took effect.

This is perhaps the most categorical position, this far, on the matter, a clear indication that the July deal between MPs and President Kibaki was not binding.

In the deal, MPs got the Government’s word that the taxation of their allowances will be postponed until after 2012. But that was before the new Constitution was promulgated.

Clause 210 of the new Constitution directs that all public officers pay tax on all their income.

The tax chief was speaking on the sidelines of the launch of this year’s edition of the taxpayers’ week at Nairobi’s Times Towers.

Marshall Resources

The announcement came against a backdrop of an order from the Minister for Finance, Mr Uhuru Kenyatta - delivered at the function through Financial Secretary Mutua Kilaka - that the Kenya Revenue Authority was central in marshalling resources for the successful implementation of the new governance regime.

It also comes within the week that Parliament is scheduled to debate the Finance Bill 2010, which, if passed without amendments, will help the country realise its Sh1 trillion budget passed in June for the fiscal year 2010-2011.

According to the tax chief’s memo on the matter, seen by the Nation, the total revenue loss following the MPs’ rejection of the taxation proposal, together with the failure by Constitutional office holders like judges to pay tax on their allowances, was Sh670.1 million.

MPs have been adamant that they will not pay tax on their allowances unless their pay is increased. They had even adopted a report by a tribunal which proposed that their pay be raised to Sh1.1 million and then taxed. This prompted a furore, even from the Finance Minister, who told MPs that the Treasury had no money.

Mr Waweru oozed confidence that KRA will not fail the country in collecting enough money to implement the new laws.

He said KRA’s online services had helped seal the loopholes in the collection of taxes.