House Team Defends MPs Over Tax Move

Alphonce Shiundu

23 June 2011

Nairobi — The Parliamentary Service Commission has come to the defence of Kenyan MPs regarding the taxation directive by the Kenya Revenue Authority.

The PSC—the administrative wing of the august House– said Thursday MPs won’t pay tax on their hefty perks until the law was reviewed.

Mr Walter Nyambati, the vice chairman of the PSC, Mr Olago Aluoch a PSC member in charge of procurement and Mr Jamleck Kamau, a PSC member in charge of security and development, also accused the KRA of malice and mischief for having gone public with the directive.

“(The commissioner of domestic taxes, Mr John) Njiraini is being mischievous and malicious. This is one arm of government. KRA has not instituted any discussion with the Parliamentary Service Commission. They’re inciting the public against their Parliament. It is wrong. Totally wrong,” said Mr Nyambati.

The three revealed that following KRA’s threat to recover all the unpaid tax since Promulgation Day, they had initiated talks with the authority, the Treasury and the Attorney General Amos Wako, with a view to having the directive rescinded.

Mr Njiraini had said that should MPs fail to pay, then KRA would go for their assets, but Mr Aluoch said Mr Njiraini ought to have followed the law.

“He is mischievous and uncivilised. You don’t start by demanding and threatening at the same time,” said Mr Aluoch.

“The way forward is for Parliament to engage the Treasury and tell him to take responsibility and say he was wrong for issuing the threats about auctioning our assets.”

“The bottomline is, we’ve to be civilised. Our dealings must be civilised. There’s no reason why KRA must give threats to MPs. If he wrote to us, we’ve not written back. He should wait for us to communicate to him, if our communication is negative, that’s when he could have gone public,” Mr Nyambati added.

“We have to sit down with the KRA and agree. If there’s any issue about paying tax at the end of the negotiations we will pay. We’re angry about the threats being issued by the KRA.”

Thy dismissed as “nonsense and rubbish” the excuse by MPs that they have commitments and that’s why they should not pay tax.

Mr Aluoch told off his colleagues who have threatened to repeal the KRA Act or block this year’s budget if the taxman goes ahead and takes his share from their perks.

“These are MPs with kneejerk reaction. I repeat this is nonsense. It should not be mentioned. We should be going by the law, and so far the law is on the on the side of MPs. It would be reckless,” said Mr Aluoch.

The PSC commissioners fell back on what it termed as the “opinion of the Attorney General” that was issued last July, just before the referendum of the Constitution saying that the KRA can’t tax them both “in law and in fact”.

Mr Kamau said the President and the AG, “unless they were not being genuine” promised to abide by the opinion and have them enjoy the tax free allowances until their term in Parliament ends.

While, they noted that the AG’s opinion cannot be superior to the Constitution, they said it was based in law and that anyone with a problem should go to the Supreme Court for an interpretation.

They then cited the Sixth Schedule at Section 6, it that says the rights and obligations that were enjoyed under the old Constitution shall be enjoyed in the transition period.

They argued that their obligation was to pay tax, while the government’s was to collect tax.

However, they said, it was a right under the “laws of natural justice and principle of reasonable expectation” for them to enjoy their tax-free perks worth Sh651,000. They just pay tax on their Sh200,000 basic salary.

“You cannot change the terms of an employee’s contract midway, before the term ends. Fullstop. People are arguing based on emotion rather than fact and truth,” said Mr Aluoch.

Mr Aluoch, the MP for Kisumu Town West, then went to the Income Tax Act at section 123, saying there was a provision to cater for such situations as this where there’s a discrepancy in law. Under this law, the Finance minister can also direct the commissioner to collect tax from MPs.

They said that once the Speaker comes back from his international sojourn, the AG’s opinion and the letter from the KRA, will be made public and that the status quo will remain.

“Under the legal principle of Estoppel, he cannot go back to say that he’s changed his mind,” said Mr Aluoch.He said the Commission for the Implementation of the Constitution had no role in interpreting the law.

The tax exemption on MPs’ perks was first introduced in law in 1975. The current pay was set in 2003 after a report by a tribunal by former judge Majid Cockar.

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