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How MPs milked overburdened Kenyan taxpayers dry

A joint parliamentary session in Nairobi on May 5, 2021. [David Njaaga, Standard]

It is not unusual for the floor of the National Assembly to be turned into an arena where ‘dishonourable’ lawmakers trade insults and blows in a fanatic show of support for their political masters.  

But in September 2018, the Members of the ‘House of Chaos,’ surprisingly closed ranks.

Seething with anger, the legislators vowed to shoot down a bill that sought to introduce an eight per cent value-added tax (VAT) on fuel.

For a group whose inordinate greed had earned them the moniker of 'MPigs' from the public, this was refreshing.

Besides making law, one of the key roles of MPs was to check and balance the other arms of government, particularly the Executive.

Then it turned out that what looked like an acrimonious session on the floor of the August House was just a charade.

The MPs eventually passed the controversial Finance Bill 2018 into law, leading to a spike in the price of petrol, diesel and kerosene.

Because fuel is a critical input in the production of almost every economic sector, the eight per cent VAT on petroleum products has since dramatically pushed up the cost of living.

It was not the first time that lawmakers in the 12th Parliament had 'fooled' wananchi into believing that they were fighting for them while in reality, they were defending the policies of their parties.

One of President Uhuru Kenyatta’s government legacy will be his notoriety to use Parliament to rubber-stamp its policies, riding on the so-called tyranny of numbers where his party, The National Alliance and Deputy President’s United Republican Party, joined forces to form the Jubilee Party which enjoyed a supermajority in the August House.

President Uhuru Kenyatta during the State of the Nation address at Parliament in Nairobi on November 30, 2021. [David Njaaga,Standard]

Whenever it looked like MPs would resist, they would be summoned at State House where the President read for them the riot act.

That was the case with Financial Bill, 2018. It was also the case with controversial Security laws and the Political Parties Amendment Bill of 2022.

No checks and balances

Bobby Mkangi, a constitutional lawyer, is of the view that while there is no such thing as Opposition in the 2010 Constitution, there is however a lot of checking and balancing both within and outside of institutions.

“Unfortunately, the politics of the day managed to subvert checking and balancing within Parliament,” explained Mkangi, noting that the majority is always speaking the language of the majority.

Independent offices such as that of the Office of Auditor General which reported to the National Assembly in what was aimed at helping it perform its oversight role well were instead crucified by the lawmakers for stepping on the government’s toes.

For example, when the former auditor general, Edward Ouko, released a report showing that close to a third of government expenditure could not be accounted for, he got a backlash from an institution that was supposed to protect him. Parliament.

Mr Ouko, who served as Auditor General for 10 years since 2011, too, became, in his words, 'an unwelcome guest of the State' due to his abrasive nature.

Having seen Mr Ouko give a damning audit report of President Mwai Kibaki’s last budget for the financial year 2012-13, Uhuru and Ruto were keen to keep this man in check.

Thus, Jubilee MPs plotted to remove him from his post, which is protected by the Constitution, immediately after winning a second term.

They accused him of corruption and abuse of office, including hiring largely from his ethnic community, with a parliamentary inquest recommending that a tribunal be set up even as he stepped aside.

“You know I was working with the hurdle of what you call a deep state. Yeah, and it was not easy,” he told The Standard.

Former Auditor-General Edward Ouko before the Constitutional Implementation Oversight Committee (CIOC) in Parliament, Nairobi on December 2, 2020. [David Njaaga, Standard]

The problem in the Kenyan context, said Mkangi, is the MP paying homage to the wrong boss- his party leader- rather than those who elected them.

“Balance has to start with the individual member. Here it is the opposite,” says Mkangi.

Uhuru, who had held a Parliamentary Group meeting with his Jubilee Party MPs, sought to explain to Kenyans why the eight per cent VAT on petroleum products was necessary.

He argued that the 2010 Constitution that introduced county governments boost service delivery, substantially increased the cost of running the government.

“Having transferred over a trillion shillings to county governments since 2013, we’ve seen major improvements in service delivery and improvements in the lives of Kenyans,” said Kenyatta, adding that the taxes collected had been used to build infrastructure and healthcare projects.

Kimani Ichung'wa, the MP for Kikuyu Constituency and by then the chairperson of the powerful Budget and Appropriations Committee, reckoned that the country needed more taxes so as to get closer to a balanced budget where there is no borrowing.

But this was not necessarily true. Almost all the infrastructural projects had been built using borrowed cash.

This debt, especially interest, needed to be paid promptly using taxes. It would be catastrophic if Kenya defaulted on payment of its debts, which is why the government relied heavily on a 'compliant' Parliament.

In the same financial year when the eight per cent VAT was being introduced, excise duty on airtime was increased to 15 per cent and that on financial transactions pushed up to 20 per cent. Kenya was expected to pay interest amounting to Sh376 billion.

This was more than the Sh357 billion in VAT that KRA had collected in the previous financial year.

Executive control of Parliament

Eager to build the mega infrastructure projects using loans, but also desperate to repay them using taxes, the Kenyatta administration ensured that almost every piece of legislation that was brought to Parliament was enacted into law, with Parliament morphing into an appendage of the Executive.

The approval of budget deficits - the difference between tax revenues and total spending - led to a huge accumulation of debt, and crowded out other public services such as recruiting more teachers, beefing up security, or procuring more drugs as much of the money went towards payment of interest.

Under the VAT 2013, which the Jubilee Government introduced as soon as it came to power, the 16 per cent VAT, or consumption tax on motor spirits, aviation spirit, jet fuel, kerosene, and gas oil was to be implemented in the same year.

However, MPs knew that Kenyans who were still reeling from the shocking reports that the legislators wanted to double their salary as soon as they got to Parliament - were certainly going to protest.

Thus, the MPs pushed its implementation by three years to September 2, 2016, when it was expected that Kenyans would be ready for the next tax.

They were not ready even by then and so the legislators, once again, kicked the can forward by another two years to September 2018.

But this time, the legislators were caught napping, with the provision automatically taking effect on September 1, 2018.

When they woke up trying to extend the implementation by another two years, the Kenya Revenue Authority (KRA) had already imposed the 16 per cent VAT on all petroleum products, with a litre of petrol being quoted at Sh127.80, a record high by then.

A Rubis fuel station attendant fuels a car along Koinange Street in Nairobi on September 16, 2021. [Boniface Okendo, Standard]

They quickly crafted another extension in the proposed law. President Kenyatta returned it to Parliament, and would compromise, slashing the 16 per cent tax by half, in what he said was ‘balancing between short-term pain and long-term gain’.

MPs needed a two-thirds majority to overturn the President’s proposal of eight per cent VAT, which they knew they could not garner as most of them do not attend sessions.

And with President Kenyatta and former Prime Minister Raila Odinga whipping their troops, the only to redeem themselves was to create a farce.

Without the eight per cent VAT, Kenyans would have enjoyed a reprieve at this time when the price of fuel has hit an all-time high, with the existence of a fuel subsidy.  

The rise in public debt

Also, under the watch of the National Assembly, the country’s stock of public debt dramatically rose to a high of Sh8.2 trillion, with some staunch Jubilee politicians, largely due to the realignments occasioned by the next elections, regretting some of the decisions that the government made.

"We (Parliament) have failed in our oversight duties. The country is in a hole for we said yes instead of no. Ours is an error of omission, " said Gatundu South Member of Parliament Moses Kuria in 2019

"Every year we have sold to Kenyans this romantic story that all is well because we respect the Executive and most of us are in the ruling party."

Mr Ichungwa, who is now with the Deputy President in the United Democratic Alliance, and under the umbrella of Kenya Kwanza will be facing the Azimio la Umoja Coalition headed by Kenyatta and Odinga in the August 9 polls, has also since apologized to Kenyans for misleading them into supporting the changes.

As soon as Jubilee came to power, it proposed, in its first budget, exempting staples maize and bread from taxes under a proposed law that has fanned widespread discontent but consumer groups say the concession is not enough.

With exempting, the government sought to re-introduce the 16 per cent value-added tax on most inputs used for the production of foodstuff further inflaming discontent at a time when teachers were in their second week of a nationwide strike demanding higher housing, medical and transport allowances, while other civil servants including the police are clamouring for higher pay.

Hearkening to protests, the government noted that maize flour and bread would remain zero-rated.

But the warning was clear.

In the following years Parliament would approve the repeal of the law that had previously granted the remission of excise duty at the rate of 90 per cent on beer made from sorghum, millet or cassava grown in Kenya.

This saw the price of low-end beer, Santor Keg, escalate with some Kenyans going to the consumption of illicit drinks as an alternative.

MPs also passed a law that introduced 16 per cent VAT on pesticides at a period when the country's harvests were being ravaged by fall army worm.

They even allowed for the introduction of the 16 per cent VAT on cooking gas. A 13-kilogram LPG is currently retailing at a record high of Sh3,500 in some places in the country.

More excise duty was also slapped on airtime and loans.  

Today, there is no clear line as to who is in the Opposition and who is Government - thanks to the Handshake of April 2018.

This turn of events has led some members of Deputy President William Ruto’s UDA, most of whom were initially in Jubilee Party, to insist that Parliament might have abrogated its oversight role after the Opposition party, ODM Party, went to bed with the ruling party.

President Uhuru Kenyatta with Azimio La Umoja flagbearer Raila Odinga during the coalition's National Delegates Conference at Kenyatta International Convention Centre (KICC) in Nairobi City County on March 12, 2022. [The Standard]

While supporting the introduction of the eight per cent VAT on petroleum products, the then Opposition Party, came up with conditions that it would only support the president's position for a year.

“We feel the need to address the suffering of the people while also ensuring development is delivered,” said National Assembly Minority Whip Junet Mohammed.

More than three years later, the Raila’s party is yet to revoke the law even as Kenyans pay a high price for their fuel.