Kenyan MPs say won’t pay taxes, warn on budget

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Kenyan MPs will not pay back-dated taxes demanded by the government and some could block budget allocations to state agencies if they are forced to pay, said legislators.

Some parliamentarians – who are among the best-paid parliamentarians in the world – said paying taxes would cut their income drastically and risked making them more open to bribes while voting on key issues in parliament.

Walter Nyambati, vice chairman of the parliamentary service commission that deals with the legislators welfare, said in a statement his fellow MPs had agreed not to pay the taxes, Reuters reports.

Lawmakers’ pay is a touchy issue in east Africa’s largest economy where nearly half of the population live below the poverty line. Scores of Kenyans marched through the capital last July when MPs voted to boost their salaries by 25 percent.

The MPs backed down but still earn nearly $10,000 a month. According to government statistics, the average minimum monthly wage in major urban areas in 2009 was $110.

The tax authorities say MPs, as well as the president, the prime minister and judges, owe close to 1 billion shillings in unpaid taxes that must be settled within 30 days.

The Kenya Revenue Authority said the taxes date back to September 2010, a month after a new constitution requiring lawmakers to pay taxes on allowances took effect.

The tax authority warned it could auction MPs property or freeze their accounts if they fail to comply.

Nyambati said the Attorney General had advised them that the new taxes would apply only after elections due in 2012.

The parliamentarians also argued that their pay should not be taxed because they are traditionally expected to pass on some of their salary to constituents, to keep their support.
“The moment you put MPs through financial distress, when one is not able to make ends meet, then certainly that person becomes very easy to compromise,” MP John Mbadi told Reuters.
“The probability of being compromised is very high. I have known of cases where MPs have been taking as low as 200,000 shillings to take a position,” he said.

BUDGETS BLOCKED

Mbadi said MPs were considering blocking funds allocated in the state budget for 2011/12 fiscal year (July-June) to the country’s main security agency, NSIS, and the presidency.
“We will vote to reduce the budget on the NSIS and the president’s and prime minister’s travel and entertainment allowances if this thing is forced through,” he said.

John Njiraini, the commissioner of domestic taxes at the Kenya Revenue Authority, said the MPs had been paying tax on their basic salary – about 23 of their total income – but under the new law, they must also pay tax on allowances.

He said only two of the country’s 222 MPs were paying tax voluntarily on all their income, and the public row with parliamentarians was likely to end up in the courts.
“When you have a tax system that discriminates, it complicates compliance. People ask, ‘why me?’ when they are told the have to pay tax when others are not paying tax,” he said.
“It is easy to see why this issue has become so emotional.”

Many Kenyans, who already consider the parliamentarians lazy, corrupt and greedy, say the lawmakers are a privileged lot and should be made to settle their unpaid taxes now.



MPs first angered the public by quadrupling their salaries in 2003 as their first order of business after elections.
“I earn very little salary and I am entitled to pay tax so why should they not pay taxes as they are part of Kenyans. They should pay taxes like other Kenyans,” said taxi driver Isaac Wambugu in downtown Nairobi.