Court forces KRA to reveal MPs who defaulted to pay Sh1b in taxes

The Court of Appeal has ordered the Kenya Revenue Authority (KRA) to reveal names of MPs who defaulted on paying taxes.

The court wants information on MPs who served in the 10th Parliament who did not pay taxes, how much they owe KRA and those who paid. The taxman has 30 days to comply with the court order.

Justices Phillip Waki, Roslyne Nambuye and Patrick Kiage, however, limited the details to salaries, allowances and emoluments (benefits) noting that the leaders’ private incomes are not meant for public scruinty.

The case was filed by Reverend Timothy Njoya and he targets Sh1 billion uncollected taxes from then 209 law makers.

The MPs risk being forced to pay all the monies owed to KRA.

Members of the 10th Parliament took offence with section 125 of the Income Tax Act to avoid or evade paying taxes on their full salary and perks.

They claimed that tax affairs are private matters and cannot be made public and the National Assembly Remuneration Act, exempted them from paying taxes.

MPs planned to fight this legal requirement with the Bill of Rights, which they argued would be violated if their incomes were reduced.

Recommendations

The Kenneth Marende-led Parliament accused former President Kibaki, Prime Minister Raila Odinga and Vice President Kalonzo Musyoka of back stubbing them as they paid their taxes.

They MPs formed an ad hoc committee which comprised of six Cabinet ministers, four assistant ministers and six backbenchers in a bid come up with recommendations that would include formulation of three pieces of legislation to resolve the tax row.

MPs formed a 15-member committee which composed then Deputy Prime Minister and Minister for Finance Uhuru Kenyatta, former Cabinet ministers the late John Michuki, Naomi Shaaban, James Orengo and Dalmas Otieno, Assistant Ministers Margaret Kamar, the late Joseph Nkaissery, David Musila and Government Chief Whip Jakoyo Midiwo.

MPs who represented backbenchers were William Ruto, Rachael Shebesh, and Kiema Kilonzo. The MPs also lashed at their colleagues, who were paying tax even before the new Constitution made it mandatory. All this was decided at the Speaker’s Kamukunji and the aim was to have a gentleman’s agreement between the Executive and legislators that the taxation law would apply to the 11th Parliament.

Dismissed the argument

But the Judges dismissed the argument saying that there is no one above the Constitution and the tax burden must be shared by all equally.

“We must take judicial notice that the people of Kenya in their aspiration for more accountable government installed a system of servant leadership that eschewed certain unjustifiable principles such as tax exemption for MPs,” the judges ruled.

“Constitution of the Republic, is binding on all persons including the Executive and Members of Parliament.”

KRA was found to have violated the Constitution for placing a blind eye on defaulting MPs.

The judges ruled: “KRA has violated the provisions of Articles 209 and 210 of the Constitution. These Articles imply that no person shall be exempted from taxation and that the tax burden of the nation shall be shared equally.”

The petitioner accused KRA of refusing to collect taxes from the legislators.

In 2011, legislators rejected a 30 day ultimatum given by KRA to remit their taxes. They threatened to shoot down the 2011-2012 budget and the the Finance Bill if the taxman did not shelve the demands.

Njoya wants the court to order MPs who defaulted to pay full taxes plus interest.

Failed to give evidence

KRA opposed the case arguing that the cleric failed to give evidence to demonstrate that it had colluded with MPs not to collect taxes.

The taxman also argued that he had not failed to provide the information sought by the petitioner.

KRA shifted the blame for not collecting MPs to Parliamentary Service Commission saying that it is the employer and the source of the money.

“If taxes were not paid, it is the Parliamentary Service Commission that should have been held responsible,” KRA told the court.

KRA however admitted that it did not provide an answer as to whether taxes were paid or not.

Attorney General Githu Muigai, also named as a respondent in the case, did not challenge the contention that all Kenyans must pay taxes, but asked the court to dismiss the case.

Court of Appeal observed that although tax information is a confidential affair, the public right to know who did not pay is critical in ensuring that MPs are accountable and  are transparent on what they earn.

“We respectfully agree with those sentiments, as we perceive in our own Constitution a deliberate effort to fashion an open and free country where governance is democratic and accountable to the “wananchi,” the judges ruled.

jmuthoni@standardmedia.co.ke