Finance minister Uhuru Kenyatta said the Treasury chose to settle the arrears in bulk through a grant without review. Photo/FILE
Treasury has for the first time defended its decision to pay Sh2.3 billion in tax arrears for MPs, saying it was more cost-effective in the long term than increasing the legislators salaries as was recommended by the Akiwumi Commission.
The commission chaired by retired judge Akilano Akiwumi had proposed that MPs’ salaries be increased before the allowances of Sh651,000 could be brought under the tax net.
Members of Parliament only pay tax on their basic salary of Sh220,000.
Finance minister Uhuru Kenyatta said the Treasury chose to settle the arrears in bulk through a grant without review.
“The grant expires and dies with the life of this Parliament and secondly we do not see it as a net additional expenditure on the exchequer,” said Mr Kenyatta.
The decision sparked a furore with critics saying it amounted to shielding MPs from taxation while the Constitution requires every citizen to pay tax.
The rationale has further raised eyebrows because under the Constitution, which creates the Salaries and Remuneration Commission to determine the salaries of public officials, the Akiwumi recommendations would have no legal import.
The report had proposed that the MPs monthly salaries be raised from Sh871,000 to a Sh1.1 million, which would be treated as gross income subjecting the allowances.
Previously MPs used to rubberstamp their salary increments on the recommendation of a committee of members through the Parliamentary Service Commission.
Some lobby groups have gone to court over the issue but Treasury says the decision had backing from the cabinet.
Mr Kenyatta defended the payment when he said the government cannot raise money to employ 28,000 teachers on a permanent basis as demanded by the sector unions. About 200,000 teachers have been on strike since Monday to press for the recruitment, paralysing learning in public primary and secondary schools.
Treasury has been accused of redirecting Sh5.5 billion allocated to the Ministry of Education for employment of 28,000 teachers to settle the MPs’ tax arrears and raise salaries for the military personnel.
He said that the salary increment to the Army was overdue following salary review of the police force and teachers in the previous years.
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