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Thursday, September 2, 2010

I don't think these fellows will pay tax!

Well, it is September and people are wondering if the MPs will pay tax on their allowances beginning this month. On my part, I don't think they will. But I could be wrong. Indulge me.
According to the MPs, section 210 (3) of the new Constitution, is explicit that they should pay tax. But they argue that doing so will be taking away a right that they already enjoy.
On the other hand, the Sixth Schedule extends the powers of the Parliamentary Service Commission and its mandate to set the lawmakers’ pay package, so constitutionally, MPs are not barred from seeking more money from the Treasury. It is a question of morality.
Still, the new Constitution favours MPs at 259(1), which directs that the Constitution shall be interpreted in a manner that “advances the rule of law, the human rights and fundamental freedoms in the Bill of Rights; permits the development of the law and contributes to good governance.”
If the legislative, representation and oversight mandate of the MPs is looked at through that lens, then they have an upper hand in seeking more money before taxation, or now that it’s midway through their contract, they can as well enjoy the status quo until 2012.
Those supporting this school of thought argue that if anyone goes to court to have MPs pay tax, the court is likely to be guided by article 20(4)(a). This section directs that in interpreting the Bill of Rights, the court or tribunal “shall promote the values that underlie an open, democratic society based on human dignity, equality, equity and freedom; and the spirit, purport and objects of the Bill of Rights.”
And because courts rule based on evidence adduced before it, MPs believe, they will have an easier time arguing their case based on these clauses.
However, the catch, some of the MPs argue is in 259 (8): “If a particular time is not prescribed by this Constitution for performing a required act, the act shall be done without unreasonable delay and as often as occasion arises.”
If this is read together with clause 210 and clause 210(b)(i) that “the burden of taxation shall be shared fairly”, then as some MPs argue, the taxation would be immediate and that means beginning September, they will have to do with lesser money in their pockets.
However, Mr Marende, the man who chairs the Parliamentary Service Commission, that all-powerful body that manages the august House, has declined to give his legal opinion on the matter.
“If I volunteer any opinion, it will be prejudicial to any position that I will take in future. I am supposed to be an impartial chair,” he said. “If you take any two lawyers to offer their opinion on what seems like a straight-forward matter, they’ll give different opinions.”
Knowing the public exasperation that always erupts whenever MPs are discussing an increase in their pay, Mr Marende simply said: “From where I sit, as the Speaker of Parliament, some decisions are not enviable.”
Such a statement is a reflection of how badly he wants to achieve the nigh impossible: to please MPs and still please the public.
Having declared that the passing of the Akiwumi tribunal report was in accordance with the Constitution, the Speaker’s options are limited. He just has to push for the implementation of that report.
The other option, which is unlikely, is to reintroduce the report to Parliament –the House has already reached a unanimous decision on the matter—and have MPs amend it.
The tribunal’s report raises MPs’ pay to Sh1.1 million, doubles their allowances from Sh5,000 to Sh10,000, directs that MPs have to pay tax on some of their allowances, to an extent that even with the seemingly huge income, the net take home increase will be Sh12,000.
But still, he said, he will not shy away from taking a stand if the MPs come to him for direction on the way forward.
“As and when I will be challenged, I will make a communication, and that will be an informed opinion that will uphold the Constitution,” said Mr Marende.
To uphold the Constitution, that is, to follow the law, is what Mr Marende said he did when he appointed the tribunal led by retired appellate judge Akilano Akiwumi to look at the MPs’ terms of service. It is what Parliament did when it approved the report raising their pay, their sitting allowance before agreeing to pay tax on their allowances.
Beginning August 27, MPs will not have any solid basis in law not to contribute substantially to the Exchequer, because the clauses in the Income Tax Act and the National Assembly Remuneration Act, which erstwhile shielded their allowances from the taxman will be inconsistent with the Constitution.
If the President, who is also an MP backs them, then they can go on until 2012 earning the same pay.
But then, the Akiwumi report was not just about pay for MPs, it also had the pay of the Prime Minister and his two deputies, and Parliament agreed to have this backdated to April 28, 2008 when the coalition government was formed. It had a retirement package for the Speaker, the Vice President, and the PM. It had stipulated the gratuity for MPs and raised it from Sh1.5 million to Sh3.6 million.
All these, even with the bad publicity that it attracts, will have to be implemented one way or another.
MPs are not yet home and dry concerning a pay-cut just because the Akiwumi tribunal proposed that they be paid so much. The Kenya Revenue Authority, The Treasury and Kenyans have long complained that their pay is exorbitant.
So, the clause in the Salaries and Remuneration Commission is likely to see post-2012 MPs earning less than the members of the current Parliament, that’s if the economy does not improve substantially.
The catch is in article 230(5)(a) which seeks to ensure that the country can afford to pay all its employees. And with a Parliament of 350 members, plus a 68-member senate, then perhaps, the commission will be justified to trim the pay. But then, the taxman may just have to raise taxes to feed the 418 lawmakers that the new law provides.
For now, Kenyans can only wait to see how the President executes the super-secret deal he had with MPs. And MPs too have their eyes set on the Treasury to bring laws to actualize the Akiwumi report. The waiting continues.

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