MPs prepare for war with Kibaki over send-off pay

MPs Wednesday defied President Kibaki’s rejection of their Sh2.1 billion severance package, setting Parliament on a war path with the Executive that could plunge the government into a financing crisis.

The parliamentarians maintained that there was nothing wrong with the amendments they made to the Bill to add a Sh9.3 million sendoff pay for each MP contrary to Mr Kibaki’s declaration that the changes were unconstitutional and not in the public interest.

READ: MPs approve Sh2bn as send-off package

The differences between the Legislature and the Executive risk stalling the passing of the Finance Bill within the remaining term of Parliament and ultimately denying the government the legal basis to charge new taxes in this financial year.

Parliament is due to take a month-long recess beginning next week and reconvene in mid-November for about three weeks after which it will effectively stand dissolved.

More than 100 MPs are expected to change their parties on January 4, just 10 days before the official dissolution of the House on January 14, effectively losing their seats and disrupting House activity.

Failure to pass the Bill by January exposes the government to legal action by companies seeking to block collection of taxes that will be lacking a legal backing.

Such action would leave the government without the new revenue streams it is expecting to raise the billions of shillings with which to pay for salary deals it signed with teachers, lecturers and doctors last month.

The list of new tax measures introduced through the Finance bill includes the 10 per cent excise duty on commissions charged for mobile money transfers and higher taxes on beer making East African Breweries Limited and Safaricom possible challengers to Treasury in the event that Parliament delays passage of the bill.

The Treasury faced a similar predicament last year following a stand-off between the executive and parliament over amendments to the Finance Bill that sought to regulate interest rates.

Wednesday, the MPs promised to marshall the 148 votes required to overturn the President’s position on the Bill, a tall order given the impact that the public outrage on the matter is likely to have on voting patterns in the House.

READ: Kibaki rejects MPs' Sh2bn send-off package

“We will raise the numbers to counter the President or refuse to pass the Bill at all. We do not fear what Kenyans say so long as we keep the Sh9.3 million send-off package because we are overburdened by demands from our constituents,” said a first term MP who did not want to be named because of the raging public anger over the matter.

Analysts however maintained that in the ensuing battle, the odds are in the President’s favour.

“A delay will be to the MPs’ own disadvantage because they leave in December and have more interest in the Finance Bill than the gratuity,” said Kipchumba Murkomen, a lawyer and political analyst.

Failure to pass the Finance Bill risks stalling the payments of other benefits that the MPs are entitled to at the end of their term.

“Even if they marshaled the two thirds majority required, the move can still be challenged in the courts as unconstitutional,” Mr Murkomen said.

The Institute of Chattered Public Accountants (ICPAK) dismissed the MPs demand for gratuity as untenable in the labour market because they are already entitled to a pension funded by the government.

“MPs cannot purport to accrue to themselves gratuity while at the same time enjoying pension benefits funded and managed by the same employer,” said ICPAK.

But Mithika Linturi, who chairs parliament’s Public Investment Committee (PIC), said the MPs acted within the law which stipulates that any public officer whose contract expires at the end of their terms gets a gratuity calculated at the rate of 31 per cent of their basic pay, in this case Sh9.3 million each for the 224 MPs.

“What MPs did in amending the National Assembly Remuneration Act Cap 5 was to align their send-off pay with the market practice,” he told the Business Daily at Parliament buildings a day after President Kibaki refused to assent to the Bill.

Mr Linturi did not however address the question as to whether Parliament had powers to make any amendments to the law that touches on their remuneration.

The Constitution has invested those powers in the Salaries and Remuneration Commission – the body that has the mandate to determine the pay and allowances of all public servants.

Mr Linturi cited Article 115 of the Constitution which stipulates how parliament deals with a presidential memo rejecting a Bill.

“The President has the discretion in law not to sign any Bill passed by the House into law. He can however return the same to us with a memorandum indicating areas or reasons why he declined to assent to the law and we are bound to respond as provided for in law,” Mr Linturi said.

The MPs have the option of taking the President’s concerns on board and passing the amended Bill or retain the earlier version with 148 votes.

Any Bill passed by parliament either gets a presidential assent or automatically becomes law 14 days after its passage if the president does not act.

More recently, the Finance Bill has become a bargaining tool for MPs who often act in the knowledge of the government’s need get authorization for the collection of new taxes.

Last year, parliamentarians made a spirited attempt cap interest rates through amendments to the Finance Bill but made a backroom deal with the Finance minister to instead increase their terminal allowances.

The deal came after the Treasury withdrew the Finance Bill from the floor of the House more than three times to avoid the capping on interest rates.

It ultimately passed in April this year, just two months to the end of the financial year.

The Salaries and Remuneration Commission, whose powers had been trimmed by the legislators in order to facilitate the introduction of the bonus pay, said that it would not take any actions and would wait to see what unfolds after the President’s decision.

“We have chosen to let the matter rest for the time being,” said Daniel Ogutu, the commission’s vice-chair.

It will now be upon the minister of Finance to mobilise the House to take the President’s position and reintroduce the Bill without the amendments.