THE NEW CONSTITUTION COMPELS PRESIDENT AND TOP BUREACRACTS TO PAY TAXES

DAILY NATION
By WACHIRA KANG’ARU,
November 23 2009

Prime minister, vice president, military top brass and judges also to give their dues
The tax-free, all-expenses-paid lifestyles of the president, vice-president, prime minister and MPs will be history if the draft constitution becomes law.

The new constitution makes it illegal to exempt any State officer from paying taxes.

MPs, who only pay taxes on their salaries — which stand at Sh200,000 — have fought off attempts to tax their allowances, which push their monthly earnings to at least Sh850,000.

Protected by Act

They are protected by the National Assembly Remuneration Act while the Constitutional Office Holders Remuneration Act gives judges and other holders of such positions a tax-free existence.

However, the harmonised draft constitution overrides the two laws and requires everyone to pay taxes.

“No law may exclude or authorise the exclusion of a State officer from payment of tax by the reason of the office held by the State officer; or the nature of the work of the State officer,” the draft says.

To clear doubts over its intentions, the draft goes ahead to define a State officer to include the president, VP, prime minister, ministers, assistant ministers and MPs.

The list of constitutional office holders include the Attorney General, judges, the deputy director of prosecutions and members of constitutional commissions.

The Committee of Experts who crafted the draft have proposed to cast wider the tax nets by bringing on board representatives of the devolved governments — at the regional and county levels. This means that regional governors, heads of counties and members of their assemblies will be required to pay taxes.

The Chief of General Staff and commanders of the Army, Air Force and the Navy and senior military officers will also pay taxes.

Currently, a wide array of top public officials is exempt from taxes, even though the holders earn good salaries. The holders are also allowed to import luxury cars duty-free.

MPs in particular have made public their disgust at attempts to tax their allowances and they shot down proposals by the then Finance minister Amos Kimunya in the 2008/2009 budget.

The motion was defeated with MPs accusing Mr Kimunya of introducing populist ideas to create conflict between the electorate and lawmakers.

Most of those opposed to taxation of their allowances argued the nature of the work, which includes fund-raising for funerals, school fees, hospital bills and development projects, made it difficult to comply with the tax proposal.
MPs earn about Sh850,000 each a month, out of which only the basic salary of Sh200,000 is taxed. The allowances are mainly made up of mileage and entertainment perks, which are tax-free. The president is paid Sh2 million a month and is not taxed.

Due to public pressure, the Parliamentary Service Commission appointed a tribunal to collect public views on MPs’ taxes and pay.

During the hearings, Kenya Revenue Authority strongly recommended taxation of the entire pay of MPs, saying taxation was a “nuisance and painful to everyone” but paying taxes was not optional.

The tribunal, headed by retired judge Akilano Akiwumi, handed its report to National Assembly Speaker Kenneth Marende two weeks ago even though its contents are yet to be made public.

Mr Marende said the report would be tabled in the House once he has read it. However, those who have seen the report said it proposed taxation of MPs’ salaries and allowances in addition to setting clear pay and allowances for the vice-president and the prime minister.

If the draft constitution becomes law, the president, PM, ministers and MPs will start paying taxes after the 2012 elections.