MPs likely to pay tax from July 1

All State officers, including MPs, could from next month start paying taxes in line with the Constitution.

Finance minister Njeru Githae has sought an amendment to the Customs and Excise Act to compel legislators to pay taxes.

Although all tax measures take effect after the Finance Bill is passed, a provisional collection of taxes and duties order deems all provisions of the Bill relating to taxes as if they were law with effect from Friday.

Parliament has remained defiant over payment of taxes, saying the demands by the taxman were illegal.

The MPs relied on Article 210 (1) of the Constitution to decline to pay taxes. The Article states that “no tax or licensing fee may be imposed, waived or varied except as provided by legislation.”

But KRA applied Article 210 (3) to demand the tax arrears. It stipulates that “no law may exclude or authorise the exclusion of a State officer from payment of tax by reason of the office held by that State officer or the nature of work of the state officer.”

READ: Pay up or go to court, taxman tells defiant MPs

Although some MPs have paid their taxes, majority of them have not stating that they were elected under the old Constitution and taxing them would be unconstitutional.

“The Constitution requires that no person is exempt from payment of taxes. In order to ensure that no person is exempt from payment of taxes, I propose to amend the Customs and Exercise Act,” Mr Githae said in his budget policy statement for the 2012/13 fiscal year.

Demand letter

Parliament has been at loggerheads with the taxman after KRA sent a demand letter asking all MPs to pay their outstanding arrears, running into millions of shillings backdated to August 27, 2010 when the Constitution was promulgated.

MPs, through the Parliamentary Service Commission, chaired by Speaker Kenneth Marende wrote to KRA outlining reasons for refusing to meets its tax obligations.

The Commission informed KRA that it had received a commitment letter from the taxman and the then Finance minister Uhuru Kenyatta stating that MPs were exempted from paying taxes when the new Constitution was passed.

They said they were in office courtesy of provisions of the old Constitution and that tax cannot be applied to them retrospectively.

KRA insisted that the MPs must pay what they owe backdated to August 2010. The Commission on Implementation of the Constitution (CIC) has also maintained that MPs, like all Kenyans, must pay taxes.