Kenyan MP's, Taxes and Friday miscellany .......

 KRA Headquarters courtesy of Businessdaily

Member of Parliament and their Taxes

Article 210 of the Constitution on the payment of taxes by state officers is as clear as day and frankly speaking admits no ambiguity.  It provides that no law may exclude or authorize the exclusion of a State officer from payment of tax by reason of the office held by that officer; or the nature of work of the state officer. 

It has been argued that Article 210 cannot be read in isolation and must take into consideration other provisions of the Constitution.  There is a principle that State Officers should not have their remuneration varied to their disadvantage in course of their term.  This is the argument by the Speaker.  Introducing taxation is a variation of terms such terms.  Article 151 on the remuneration and benefits of President and Deputy President provides that the remuneration, benefits and privileges of the President and Deputy President shall not be varied to their disadvantage while in office and that the retirement benefits payable to a former President and a former Deputy President, the facilities available to and the privileges enjoyed by them, shall not be varied to their disadvantage during their lifetime.     

Article 160 on the Independence of the Judiciary provides that the remuneration and benefits payable to, or in respect of a judge shall not be varied to the disadvantage of that judge, and the retirement benefits of a retired judge shall not be varied to the disadvantage of the retired judge during the lifetime of that retired judge. Similarly, Article 250 on the composition, appointment and terms of office of members of Constitutional Commissions provides that the remuneration and benefits payable to, or in respect of, the members of a commission or the holder of an independent office shall not be varied to the disadvantage of that person during their respective terms of office. Taking these provisions into account means that the National Assembly is being discriminated against as the other arms of Government are protected and the National Assembly should be protected too.

It is also argued that it is morally and contractually wrong and contrary to the principle of legitimate expectation.  The MPs being,  State Officers with terms and perks protected until next General Elections, went ahead and committed themselves to loans, mortgages, expensive schools for their children abroad etc upon the premise that their remuneration cannot be varied to their detriment till 2012.

These arguments sound good but negate that the fact that Constitution that came into force on 27^th August 2010 imposed a specific and unambiguous provision that is plain and obvious; there can be no legal exemptions to the payment of taxes.  This provision superseded all previous arrangements which are now subject to Article 210 which makes payment of taxes obligatory from 27^th August 2010.   Since the obligation to pay taxes is imposed by the Constitution it cannot be waived.  In my view, all the benefits due to State Officers are from the effective date are subject to taxes.  The last time I checked Article 210 has not been suspended.  

Another word on Organic Theory

I wrote about the organic theory and the attempt by Justice Ojwang’ to elevate certain statutes over other by virtue of their nexus to the Constitution.  The decision would have been avoided by reference to the Public Procurement and Disposal Act (Act No. 3 of 2005) (PPDA) which at section 5 provides;

5.  (1) If there is a conflict between this Act or the regulations made under this Act and any other Act or regulations, in matters relating to procurement and disposal, this Act or the regulations made under this Act shall prevail.
(2) For greater certainty, a provision of an Act that provides for a person or body to approve any work or expenditure shall not be construed as giving that person or body any power with respect to procurement proceedings.

In this case, the statute itself amends the other acts or regulation.  It is the intention of the legislature and it has provided that in matters of public procurement and disposal the PPDA takes priority and overrides other legislative enactments.

For advocates doing public work, this provision has been a cause for worry.  The policy of the PPDA is to ensure that public bodies obtain services at a competitive rate, the Advocates Act (Cap 16) and the Advocates Remuneration Order stand in the way of the policy of objectives of Act in that they provide minimum fees for certain services.   By virtue of section 5, the procuring authority can demand and the advocate perform services for remuneration below that provided by the Remuneration Order. A charge under section 36 of the Advocates Act prohibiting undercutting against an Advocate who is the subject of services procured under the PPDA.  Am sure this will lead to some litigation!