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Kenya's MPs ordered to pay higher taxes

21 June 11 13:02
Kenya's Prime Minister Raila Odinga and President Mwai Kibaki seated in parliament (archive shot)

Kenya's tax office is demanding that MPs pay tax on their full salary and perks, accusing them of breaching the constitution by failing to do so.

The tax office also said it wanted payments to be back-dated to last August, when Kenya adopted a new constitution.

The arrears come to about $10,000 (£6,100) for each MP.

Kenya's MPs are among the highest paid in Africa, earning a total of about $9,300 a month.

The MPs pay tax on perks worth about $2,000, while the rest of their income is tax-free.

The BBC's Caroline Karobia in the capital, Nairobi, says the MPs have a gentleman's agreement with President Mwai Kibaki, exempting them from paying higher tax during the current parliamentary term.

'Legally compelled'

They intend to pay more tax after parliamentary elections next year, when their salaries will also go up, she says.

MPs voted last year to increase their after-tax annual salaries and perks to as high as $126,000 after the 2012 election.

Their decision sparked outrage, with critics accusing them of voting for salaries higher than their counterparts in the UK.

The MPs said they deserved higher salaries because they were over-worked, and were responsible for major decisions about the nation's economic and political well-being.

Our reporter says many Kenyans are waiting to see how MPs will now respond to the letter sent to them by the Kenya Revenue Authority, which are argues that the parliamentarians are legally compelled to pay tax on their total income.

The letter was sent after MPs ignored a recent plea by Kenya's tax chief, Michael Waweru, that higher taxes would boost the government's income, making more money available for poverty-alleviation programmes.

The average annual income in Kenya is about $730, while most of the population earns less than $1 a day.

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