MPs and taxpayers put Uhuru in a major dilemma

Finance Minister Uhuru Kenyatta faces his greatest test yet over the implications of pandering to the whims of his parliamentary colleagues. For a politician who harbours presidential ambitions, any move he makes will have a direct bearing on his bid to succeed President Kibaki.

The cause of his dilemma is an amendment to this year’s Finance and Appropriation Bill, which in addition to raising the MPs’ salaries, seeks to set the eligibility for pension from two five-year terms to "after one is elected."

These recommendations are contained in a report by a tribunal appointed by the Parliamentary Service Commission review MPs’ remuneration following public calls to tax them.

Public sentiment on the one hand and pressure by MPs has placed the minister in a quandary. The Deputy Prime Minister is worried if the report is adopted and the recommendations implemented immediately without amendments, even legislators who lose petitions would be eligible for pension, further burdening the taxpayer with the cost of maintaining the political elite.

Sources close to Uhuru told The Standard on Sunday the protracted tussle over MPs demand for higher perks is forcing him to consider choosing between public confidence and being named in Parliament for declining to factor into the Budget the Akiwumi Tribunal report on their remuneration, which could rise to Sh1.4 million if implemented.

Double allowances

This figure could surpass Sh2 million per month following proposals for double allowances. Besides monthly pay, an MP earns Sh5,000 sitting allowance per day when the House is in session, besides Sh10,000 allowance per day when a House committee sits.

With 27 committees, most of the MPs on average belong to five committees, which translates to Sh50,000 per day. These figures are set to double if Uhuru caves in to the MPs’ cravings.

Ministers stand to earn about Sh2.5 million per month. Prime Minister Raila Odinga, who has opposed the pay increment, is a potential beneficiary of Sh2.7 million, while the President, who in 2003 declined a pay increment, will take home close to Sh3.5 million per month.

Sources say the minister is considering retaliating to the perceived blackmail by MPs by blocking the Integrated Management Finance Information System (IMFIS) to withhold their salaries.

The move would bring MPs to their knees, as it would result in punitive penalties if they defaulted on servicing huge bank and mortgage loans.

Uhuru’s aides say his intransigence is based on perceptions of being viewed as the most extravagant Finance Minister after laying out a Sh1 trillion Budget, the highest in Kenya’s history.

It is no longer a secret that MPs, especially those serving first terms are some of the most highly indebted personalities. Their ‘glamourised poverty’ feeds their appetite for mega bucks.

IMFIS is an automated system Treasury uses to disburse money to Government departments that first grabbed public attention last year after a printing error was detected in the 2009/10 Budget. The Finance Minister was forced to switch off IMFIS to prevent imminent financial haemorrhage.

Former Finance Minister Chris Okemo says Uhuru is being unnecessarily stubborn. "The net effect of the Akiwumi report is almost zero. It is an adjustment that should enable MPs pay taxes," says Okemo, the Nambale MP.

He blames the media and the civil society for blowing the issue out of proportion. While the minister’s recourse to hardball has the potential to raise his profile in the Kibaki succession race, he in the same breadth risks losing credibility by breach of the Constitution, according to Mars Group CEO, Mr Mwalimu Mati.

Instant pay rise

"It is illegal for him to attempt to block payments to a constitutional body," says Mati. "The minister can only decline to implement the parliamentary resolution if the President does not assent to the Bill," he adds.

Internal Security Assistant Minister Orwa Ojode says the adoption of the recommendations does not translate into instant pay rise.

"The minister will have to bring a Bill in the House for debate during which the implementation schedule will be deliberated and set," says Mr Ojode. He has also the option of delaying its implementation even if it sails through Parliament.

Twice last week, the House shot down an adjournment Motion by Joint Chief Jakoyo Midiwo to provide time to campaign for Proposed Constitution, which will be subjected to the referendum on August 4.

A Speaker’s Kamukunji on Thursday failed to end the standoff between the Finance Minister and the MPs, who have vowed to go for the Uhuru’s jugular for allegedly engaging in populism to gain favour with the electorate.