Media accused of making MPs' taxation ‘sensational’

Parliament in session. MPs began debate on the Finance Bill on Tuesday after Treasury gave in to their demands and withdrew a proposal to tax MPs’ allowances. Photo/FILE

MPs defended their decision to cushion their allowances from taxing on Wednesday as they passed the Finance Bill and castigated the media for “sensationalising” the matter.

They also insisted that they pay taxes amounting to Sh53,000 each month on their Sh200,000 salaries.

MPs Elias Mbau (Maragwa, PNU) and John Mbadi (Gwassi, ODM) drew the attention of deputy Speaker Farah Maalim to the headlines in some newspapers. Mr Mbau was the first to raise the matter after Question Time but he was ruled out of order by Mr Maalim.

“If it is a matter that arises from the next Bill, wait until we come to it,” the deputy Speaker stated.

Contributing to the Bill, Mr Mbadi said MPs pay taxes on their salaries and declared that allowances did not merit taxation. He listed the allowances as constituency travel and entertainment. “Why should these allowances be taxed? Why should this be subjected to screaming headlines in the media? We are not even highly paid,” he declared.

He added: “This is unfair. We do not want to be seen as daylight robbers by the public that elects us to this House.”

Mr Mbau, who had risen on a point of order after Question Time, was unable to express himself during the Bill due to limited time.

Replying to the Bill, acting Finance minister John Michuki clarified that should MPs pay taxes on their allowances, the Government would raise an extra Sh600 million.

Given up

“It is not true that the Treasury was to raise Sh2 billion as it has been reported in the media. The true figure is Sh600 million,” he said.

However, Mr Michuki said that the Government had not given up on taxing the allowances. “The issue is not over. We will continue to look for ways of bringing justice to our taxation policies,” he said.

The acting Finance minister urged the House to study past laws that exempted allowances of MPs and other office holders from taxation. “We need to study the laws that have exempted allowances of members of Parliament and other constitutional office holders. It is not a big issue,” he stated.

The minister praised MPs for supporting the Bill and assured the House that the Government had no intention of overtaxing Kenyans. The new taxation measures that were proposed in the Bill, he said, were in line with reforms being undertaken.

Parliament began debate on the Bill on Tuesday after the Treasury gave in to their demands and withdrew a proposal to tax MPs’ allowances.

Wednesday’s passage of the Bill meant the Government was now better placed to start imposing the new taxation measures that were spelt out in the June Budget after December 31, putting to rest fears that MPs would shoot down the Bill along with its measures.

Among the highlights of the Bill are zero-rating of international air travel to give the national carrier Kenya Airways a competitive edge; removal of VAT on motorcycles of up to 250cc to give taxi operators a chance to earn good income; reduction of import duty on cement from 40 per cent to 25 per cent; zero-rating of VAT on bread and rice and removal of duty of import duty on telecommunication equipment.

Other proposal were to increase the investment of insurance companies in shares from five per cent to 10 per cent; empowering the Capital Markets Authority to freeze assets of rogue stock brokers and fixing the period within which depositors have to be refunded.

To pave the way for the Bill, whose passing was frustrated last week by lack of quorum when it came up for debate, a Speaker’s Kamukunji ( an informal meeting of MPs) was held on Tuesday morning, and it is understood MPs agreed that Mr Michuki should pull out the offensive clause.

Mr Michuki carefully moved the Bill and near the end of his speech, withdrew the proposal that had put former Finance minister Amos Kimunya at loggerheads with MPs.

“The proposal to impose taxes on allowances of MPs and constitutional office holders has been removed so that we go back to the position before the June Budget,” he said to thunderous foot thumping by members.

Seconding the Bill, Internal Security minister George Saitoti stated that it was crucial for the House to pass the new taxation measures so that the tax collector can levy them after December 31.

“The taxes that are being levied until December 31 were passed during the last Budget. This House is required to endorse the new charges before that date so that the Kenya Revenue Authority can levy taxes,” he said.