Battle over MPs tax obligations goes to court

By Judy Ogutu

The protracted fight to compel MPs and ministers to pay tax on their hefty allowances has now been taken to court. Retired head of Presbyterian Church of East Africa and six others have petitioned the High Court, challenging the Government decision to settle tax arrears for MPs.

The MPs have since last month ignored a directive from the Director of Domestic Tax asking them to begin remitting their taxes within 30 days.

They have argued that the Akiwumi Commission report, which recommended increase of their salaries and allowances from Sh851, 000 to Sh1.1 million be effected so that the top-up can cushion them against tax cut.

The petition in court is against the Attorney General, the Clerk of the National Assembly, Minister for Finance, Speaker of the National Assembly, Kenneth Marende, Head of Public Service and Secretary to the Cabinet, Ambassador Francis Muthaura, and 209 MPs.

They have named the Commission on Implementation of the Constitution and the Kenya Revenue Authority (KRA) as parties to the suit.

Njoya, Constitution and Reform Education Consortium, Centre for Law and Research International, Institute for Social Accountability, Think Tank on Social and Economic Issues in Africa, Christian Partnership Development Agency, and Release Political Prisoners have gone to court through their advocate, Anthony Oluoch.

Muthaura’s directive, they argue, is a breach of the Constitution and in excess of powers conferred upon him.

To support their case, the seven argue that Article 3 of the Constitution is clear that every person has an obligation to respect, uphold, and defend the Constitution. 

They argue the decision by MPs to refuse to pay tax or to negotiate a salary increase to cushion them against taxation offends the Constitution.

On Tuesday, High Court Judge, Lady Justice Wanjiru Karanja certified their case as urgent, and directed them to serve the MPs. She also fixed a hearing date for September 8.

They want the court to issue conservatory orders restraining the AG, Clerk of the National Assembly, Finance Minister, and Muthaura from implementing his directive to the Cabinet and Permanent Secretaries that Government settles tax arrears, which KRA is demanding from ministers and assistant ministers.

Muthaura’s directive, the petitioners argue, also directed PSs to refund tax deductions made on the salaries of assistant ministers and Cabinet ministers.

They are asking the court to restrain the Minister for Finance from effecting or implementing the directive to settle the tax obligations of MPs from the Consolidated Fund or any other taxpayers’ money held or maintained by the Government.

The petitioners moved to court saying Muthaura had issued the directive on August 17, through a circular to PSs.

“The circular requires the PSs to stop further deductions from ministers and assistant ministers’ pay and directs or extends the same treatment to MPs by stating that following extensive consultation front bench will be spared the tax burden,” they argue.

On Tuesday, it was their contention that unless the conservatory orders are issued, taxpayers run the risk of being saddled with payment of MPs’ tax obligations.

They say Kenyans promulgated the new Constitution to end the culture of impunity and disregard of the law.

“Of concern was the escalating salaries of MPs in total disregard of the tax burden imposed on taxpayers, who happen to be voters responsible for the very parliamentarians’ being in the August House and by extension therefore the employers of the MPs,” the court documents state.

They argue that the agreement, representations, promissory notes and assurances issued by the Finance Minister, President Kibaki and Prime Minister Raila Odinga to MPs, do not constitute any law.  And, that even if they did, Article 210 prohibits making of laws that would exclude or authorise exclusion of any State officer from payment of tax.

The current Cabinet, they say, is comprised of 40 ministries with an equal number of assistant ministers, with some having two assistant ministers.

This, they argue, means more than 80 MPs who are ministers or assistants will be refunded tax deductions.

The tax obligation, for every MP is about Sh1.9 million, amounting to Sh1billion. The debt, if collected, they say, would ease the taxpayers’ burden on Free Primary Education, hiring of additional teachers for secondary schools, settling of internally displaced persons, and food to starving Kenyans.

Consequently, they propose to seek constitutional interpretation on whether, under the Constitution, State officers, including MPs, are under any obligation to pay tax.

Also to be sought is whether the Head of the Civil Service, the AG, the President or the Prime Minister have powers to exempt any State officer from their tax obligations.

In addition, they propose to seek constitutional interpretation whether it would be unconstitutional for the Government to carry the tax burden of MPs, using public resources or monies drawn from the Consolidated Fund or derived from taxpayers’ money.

They would also like the court to interpret, whether it would be illegal and unconstitutional for MPs to derail, sabotage or frustrate debate or passage of Bills necessary for the full implementation of the Constitution on account of the KRA demand that MPs pay taxes on their allowances.