Taxman demands Sh580m from MPs

The taxman has sent a bill of half a billion shillings to Parliament. The Sh450 million is what the 222 MPs should have paid in taxes since the promulgation of the new Constitution.

In addition, MPs will be required to hand over to the taxman Sh130 million in the penalties for late remittance of the taxes, a source with intimate knowledge of the matter has said.

According to a demand notice to the Parliamentary Service Commission by the Kenya Revenue Authority, the amount is required to been paid by August 15.

This comes in the wake of a meeting last Wednesday between top officials of the two institutions.

In their discussions, the team led by Speaker Kenneth Marende suggested it would seek interpretation of the law on taxes by the Supreme Court.

The source, who requested anonymity as the PSC had requested KRA to stop the public onslaught, said KRA expects Parliament to begin remitting the dues this month.

Ministers and their assistants have already begun to feel the impact of the deductions in the salaries paid through the ministries for the month of July. A confidential document on the meeting last week shows that Parliament is expected to present its objection to the tax demand to KRA.

At the meeting, Mr Marende and his team argued that KRA should stick to its written promise of July last year not to deduct taxes from the MPs’ allowances.

They also argued that the action by KRA contravenes Article 47 of the new set of laws, which guarantees “fair administrative action” to persons dealing with government institutions.

Mr Marende was reported to have argued that it was not fair to demand taxes in arrears yet the agreement in July was that the 10th Parliament was ‘saved’ from paying taxes.

But the KRA team led by Commissioner General Michael Waweru said the commitment was based on a view taken then by Attorney General Wako, which the Commission on the Implementation of the Constitution has opposed.

“The tax demands were based on interpretations given by and subsequent discussions held with the Commission on the Implementation of the Constitution (CIC) in May 2011,” says the document.

“The tax demands were issued concurrently with a written request to the Attorney General to revisit his earlier opinion in view of its conflict with the CIC’s interpretation. No response had as yet been received from the Attorney General,” the KRA officials are said to have reported.

The PSC could find itself in a tighter spot as there are indications a report that would have provided some relief may have been overtaken by time.

Senior Counsel Paul Muite argues that since the Akiwumi Report was commissioned under the National Assembly Remunerations Act, it has been overtaken by time as the act’s provisions are inconsistent with the new Constitution.

The act is the basis upon which the MPs are paid allowances and has been since 1975 the basis upon which they have not being paying tax ever since.