Salaries body to challenge new pay rise for legislators
Posted Tuesday, April 24 2012 at 21:02
It has emerged that MPs demanded a doubling of their winding up allowances to vote against a proposal by Gem MP Jakoyo Midiwo to cap commercial bank interest rates at four percentage points above the Central Bank Rate (CBR). The deal was reportedly struck at a luncheon hosted by Mr Githae.
In January, the Treasury increased the mortgage ceiling for Members of Parliament by Sh5 million each, raising the allocation to Sh20 million, up from Sh15 million.
The amendment to the Parliamentary Management Scheme Fund Regulations 2011 allowed MPs a longer time to repay the supplementary mortgage, before the 30th day of June, 2012 or two months before the General Election whichever date is later. The amendment was gazetted by former Finance minister Uhuru Kenyatta.
Loans under the scheme are charged an interest rate of three per cent per year, a discounted rate made possible because MPs are exempted from paying the low interest benefit tax, which is pegged on prevailing Treasury Bill rates of the previous six months.
This is much lower than banks’ average mortgage rate of 19 per cent.
Additional reporting by Edwin Mutai