BROKE: At least 100 MPs are uncreditworthy

CLOSE to 100 MPs are broke and uncreditworthy following over-commitment of their monthly salaries in huge loans, giant mortgages and salary advances. Investigations by The Star within the national assembly revealed a pathetic financial situation with some MPs earning as little as Sh15,000 per month out of their fat salary of Sh851,000.

A report by the Akiwumi Tribunal tabled in parliament last year also states that 29 MPs were earning about Sh10,000 as net pay while 81 of them earned less than Sh100,000 monthly after suffering massive deduction.

The revelations expose the desperation with some MPs and the reason for their consistent opposition to a move by the Kenya Revenue Authority (KRA) to introduce taxes on their salaries and allowances.

Each of them will be expected to pay an average of Sh265,000 per month as taxes to the government from their salaries and allowances. The taxation on MPs salaries and allowances has been backdated to August last year when the new constitution was promulgated. If KRA insists on collecting the tax immediately as per its demand letter to the National Assembly clerk, then parliament may be forced to disengage the deductions channeled towards settling members’ mortgages or their Sacco shares to foot the KRA bill. Only 70 MPs whose salaries are intact can afford to pay the taxman the Sh1.9 million in tax arrears through income drawn from their remunerations.

The Star investigated and obtained several original past payslips belonging to some MPs with two showing an overwhelming deductions leaving the owners with a minimal net pay.

One MP took home Sh27,000 in January 2011 while another one in June 2010 earned a mere Sh14,000 as his monthly net salary after suffering a total deduction of Sh836,000 from his Sh851,000 monthly pay.
Some of the MPs also face serious pay deductions after obtaining salary advances,  something that make them run broke for the better part of the subsequent month.

The Clerk Patrick Gichohi admitted that some MPs were going through difficult financial times and said that it was important to look at their tax case much more broadly. “The nature of their jobs makes it very difficult for them. It would be important that this matter is carefully evaluated. This is not an ordinary case,” Gichohi said.

The clerk further revealed that he is yet to review the number of MPs who have already volunteered to have their taxes deducted and their arrears paid. “We are going to have a meeting as Parliamentary Service Commission (PSC) next week to discuss how to handle this matter,” Gichohi said.

An official from a local bank also confided in The Star that they have encountered problems with broke MPs who want financial assistance including requisitions for bank overdrafts from time to time but who are considered financially insecure. “We have had unbelievable trouble assisting some of these guys especially with their short term loan requests and when they need dollars for foreign trips,” said a bank official.
The official further revealed that thousands of bounced cheques from the MPs are returned to MPs engaging in deception by charging accounts with insufficient funds.

Wealthy MPs in parliament have also established illegal ‘shylocks’ which attract scores of broke MPs.Those who borrow pay up to 30 percent of the borrowed amount as interest.
The money lenders threaten and blackmail their colleagues who fail to honour their payment schedules, forcing them to seek credit by borrowing from other sources to clear the ‘shylock’ debts.

Wealthy MPs are also overwhelmed by the borrowing attitudes of the colleagues who ask for small monies from time to time. “Yes I have been lending people money here. But I am concerned because most of these people do not pay up. They are very poor and leave on credit,” said an MP who runs a ‘shylock’ business within parliament precincts.

President Kibaki, Prime Minister Raila Odinga and Vice President Kalonzo Musyoka have already paid their accumulating taxes to KRA following a public outcry over their non-compliance leaving the other legislators vulnerable to constitutional penalties.

Deputy Prime Minister Uhuru Kenyatta who though has not said when he will pay his own taxes explained that it was an individual’s obligation to pay. “It is morally wrong for those who have the ability to comply to make a public spectacle and paint negatively other MPs who may be willing to comply but are unable to immediately do so in lumpsum payment,” said Uhuru.

Gwassi MP John Mbadi says: “It is true majority of MPs had planned for different things with their salaries and allowances as per the contract in 2008. I can tell you for a fact that the money KRA is looking for cannot be got through salary deductions.” He called on parliament to secure MPs by coming up with a policy that will block over-commitment of salaries.

Mbadi warned that if KRA makes good its threat  to retrieve the taxes, then MPs may lose property acquired through the parliament’s mortgage arrangements. Kigumo MP Jamleck Kamau distanced himself from his colleagues at the Parliamentary Service Commission who are battling with KRA over the taxes. “This is to authorize you to start deducting and remitting PAYE from my salary as by law required with effect from July 1 2011,”read a letter  the MP wrote to the clerk.

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