Thursday, December 04, 2008

MPs and Tax: We are Missing the Point

Of late the Kenyan MPs have found themselves in a very awkward receiving end. The media is replete with calls for them to show leadership and pay taxes. now those two words are not words that the MPs are used to seeing in one sentence without a negating word between them. even the proponents of the grand opposition are again missing the oportunity on this one and instead leaving it to one Muthamia to bask in the media glare and glory.

Kenyans are very unhappy in the wake of high fuel cost , high food prices, reducing wealth in the Stock exchange and so on. All these problems when some of the most well paid people in society adamantly refuse to pay their taxes. But i have always argued here and elsewhere that we are missing the point. I argued that the clamour for MPs to reduce their salaries was misplaced and I also hold that asking them to pay taxes is misplaced.

Lets start with the salaries. at 800,000 the MPs do not even earn what senior managers in blue chip companies earn in this country. They cannot even start to talk about the perks. But why is it that we allow leaders of our publicly listed blue chips to earn so much money yet we do not raise a finger? Why do we agree that they could take home so much money? It is because they are equaly expected to give as much in terms of performance. So by demanding that they lower the perks we are actually puting the horse before the cart. The real issue here is performance and what we should be doing is insist on them to deliver on their KPIs. If the MPs helped strengthen our economy, better our national unity, increased our collective pride, it would not matter to me how much they earned. Just like no one bothers what the blue chip chiefs earn as long as the wealth is created for shareholders

secondly on the taxes: After being close to 3 aspirants in last years election, I understood why they MPs are under preasure not to part with even a single cent. The whole exercise was extremely costly. since am a scientist, I believe that nothing comes from nothing. Nothing ever could. So when these guys use so much money, its only clear that the money will be expected back. be it loans, or savings or even donations. the same favor would be expected. further the MPs are expected to maintain a certain societal status. For that matter they will jalously gaurd what they have. Our solution therefore would be to control the expenditure during campaigns and have the MPs declare their source of funds. One other way of doing it is to restrict the campaign period to maybe 3 months.

Additionaly, the MPs may accept to pay the taxes after all but pass on the favor back the other kenyans. how would they do that? by increasing their allowances to cover the tax deductible so that the net remains 800,000 as before. What will stop them?


  1. What are you smoking?

    Ama you are being paid??? ;-)

  2. 1) MPs are 'overpaid' in relation to the GDP or Per Capita Income.

    2) CEOs are (generally) paid for performance. Our MPs are a bunch of idiots. Discussing Alvaro? WTF???

    3) Taxes. Why should other Kenyans be taxed on allowances & not the MPs? What makes them special?

    4)Perks. OD... get serious. These guys & gals get:

    - Kes 3,000,000 car allowance & can buy duty-free & tax-free cars!!! This is equal to a Kes 6,000,000 car for me!

    - Kes 1,500,000 'winding up allowance'

    - Free medical cover that allows treatment in the best hospitals ABROAD... not in India but UK, USA, Germany, etc!

    - Medical cover for their hordes of children and I think for 2 wives!!!

    - International & Local travel in first class

    Too many other perks e.g. subsidized (excellent) gym facilities, security for some of them, free parking in CBD (at parliament & Continental House)...

  3. ok, ok Coldi, Look at it this way. If we were to hire say Thabo Mbeki to fix our economy or may be Mr. Hu of china, or even Col Gadafi, how much would we be willing to pay? I hold that the issue is not the pay.

    or say assume Bill Gates offered to come in as president and raise every Kenyan above poverty line through sustainable policies. What would you offer?

    ok look at it another way, how much should our MPs earn? how much is good enough, is it 20K, or 40K or 10K. To me if you are not delivering on your key performance Indicators or objectives, you should not be paid in the first place. So what we should ideally be concerned about is delivery of services as opposed to salaries. can you be happy paying 10K to someone doing nothing? does it matter if it was 100K or 1million? It wouldn't since what you want are results.

  4. OD, I disagree with you on this one. First of all, MPs should not be voting for their own salaries, increases, perks, taxes, etc. There's a major conflict here. We need an independent body for this; a system that would allow checks and balances. MPs and Ministers are government employees. I would suggest we put them on the government pay scale, with increases based on seniority. You can't compare them to CEOs of blue chip companies. The salaries of the blue chip CEOs do not come from tax payers. They come from whatever products these companies are producing; and if a company is unhappy with a "non-producing" CEO, it's easy to fire them.
    As far as campaign funding, these people make the choice to run for office. That burden should not be placed on the wananchi. If you have the ability to raise the funds, more power to you. If you don't, hey, survival of the fittest.
    When did elected office become a place to rake in the money? Elected office should be a place to serve. If people are looking to get wealthy, they should become entrepreneurs and actually earn the high class lifestyle that they are seeking.
    I'm with ColdTusker on this one. How can we justify paying our MPs and Ministers more than some of the richest countries in the world pay their own? And then, at the same time we're looking up to these countries for foreign aid! There's a disconnect here.

  5. MPs are not CEOs... and they do not produce profits!

    Yes, I would hire Lee Kuan Yew of Singapore and pay him a % of the increase in GDP or net wealth created.

    US Senators make about $170,000/year... the economy (GDP) of the US is around $12,000,000,000,000. Per Capita Income is around $36,000.

    Kenyan MPs make $150,000 or so. Kenya's economy (GDP) is US$ 12,000,000,000 (only 0.1% of the USA). Per Capita Income is around $700 (only 2% of the USA).

  6. The MP's refusal to pay taxes, is part of a freebie mentality that is pervasive among leaders. I dropped someone at the airport (only took for 10 minutes) and had to pay Kshs 70 (for parking! - yet zooming in-out were numerous GK VIP cars, that zoomed past the gates (so did not pay). If the government is content to give a free pass to VIP's and extract every shilling from the ordinary man, why woudln't MP's feel entitled to behave the same?
    BTW Odegle - do MP's pay for parking and VIP prevliges at the airport?

  7. Its painful to admit that i have been roundly overruled by fellow blogers on this one. mmmmmh. but before i go, maybe just one last shot at it.(last kicks of dying horse) looking at what councilors are paid, being about 70K for the city fathers, comparing that to the work they do for us. would one say that was too much or too little? What would you use as the measure. me thinks its the output. so what we should focus on more is for them to provide services or quit.

    looking at it another way, most of our domestic servants, (or managers ) are paid averagely 5000 or less. this in most cases is not even 1% of that households income. looking at it critically, would you be willing to pay that 5K if the domestic was not cleaning the house or cooking or minding the baby as per the JD? how much really is too much? Would you then reduce his/her pay? or would you rather sack him and get your solution even for 10K?

  8. OD: I don't understand your last argument... kicks of a dying horse? ;-)

    On domestic help... if 5,000 is 1% of your household's income... damn... you are doing well!!!

    (P.S. I need a job wherever you are!)

  9. i meant 10% lol and further i was talking of household income! that takes into account all else including income from biashara ndogo ndogo

  10. Od-how would you justify sitting down to pass laws that govern much tax the people who vote will pay when you don't pay taxes yourself?
    Its not about how much they get paid (which is too much anyway for where our economy), but why can't they pay taxes on it like everybody else? Even cops who get paid Ksh10k pay taxes.
    As for the money they spend on campaigning, nobody forces them to.


Note: Only a member of this blog may post a comment.