NAIROBI, Kenya, Dec 4 – The Kenya Revenue Authority (KRA) on Thursday confirmed that Members of Parliament can pay taxes directly to it, putting to rest excuses adduced by the defiant lawmakers who insist it would be illegal to pay up.
In a letter addressed to Kangundo legislator Johnston Muthama, KRA Commissioner for Domestic Taxes John Njiraini said Section 3(2) (a) of the Income Tax Act provided for the taxation of all gains and profits derived from a person’s employment.
Mr Njiraini stated that while the initial responsibility to deduct and remit taxes rested with an employer, the ultimate burden of ensuring that the requisite tax was paid rested with employees.
“KRA maintains an account for you denoted by your pin and Pay As You Earn (PAYE) numbers into which all sums received on your account are credited. We shall therefore credit you account as appropriate with the current and any future remittances,” Mr Njiraini said in the letter.
“In situations where payments are made in fixed monthly or lump sum figures not attributed to clearly denoted and specific employment related activity, the same attracts tax at normal rates,” he added.
Mr Muthama who was the first MP to heed to the call for MPs to pay taxes had written to the taxman seeking to have his fat pay taxed.
He later forwarded a cheque of Sh141,368 as remittance of taxes due from his November salary but was asked to add an extra Sh65,111 after he was advised that he was supposed to remit Sh261,573 monthly.
On Thursday, Mr Muthama who is the Government Deputy Chief Whip joined the Law Society of Kenya in urging President Mwai Kibaki not to assent the Finance Bill in the absence of the clause proposing MPs pay taxes.
“When the miscellaneous Bill is introduced (with amendments for MPs to pay taxes) I will support it because if making a law or changing it is what will make others pay, then I will support it. But far as I am concerned I am through with what it takes for someone to be faithful in his country,” Muthama said at a news conference.
His remarks came a day after Prime Minister Raila Odinga disclosed that the Cabinet was planning to introduce a clause in the Miscellaneous Amendment Bill, which would seek to persuade the MPs to pay taxes on their allowances.
Mr Odinga told representatives from the private sector on Tuesday that the clause would aim to lobby the MPs to remit taxes to the Kenya Revenue Authority since the Executive arm of the government could not force them to do so.
“Are we going to lobby? Yes. We are going to try and see if something can be introduced in the Bill that will enable us to move towards that direction,” he said.
The PM further disclosed that the decision to get the MPs to pay taxes on their allowances was approved at the Cabinet level and it was the government’s position that everybody should remit taxes.
It was the first time that he spoke about the issue, which has caused public outcry. Many Kenyans want MPs to pay taxes on their allowances and they have repeatedly appealed to the President and the Prime Minister to intervene.
The proposal to tax the MPs was made by the then Finance Minister Amos Kimunya during the reading of the 2008/2009 financial budget in June but rejected outright after the MPs threatened to shoot down the Finance Bill unless Acting Finance Minister John Michuki expunged clauses authorising the deductions.