MCAs angry as 30pc tax on Sh2m car grants is effected

Nakuru Governor Lee Kinyanjui (center) flanked by Members of Nakuru county Assembly address the press after the MCA's passed the Building Bridges Initiative (BBI) Amendment Bill on February 23, 2021. [Kipsang Joseph,Standard]

A row is brewing between Members of County Assemblies (MCAs) and their leadership over plans to withhold 30 per cent tax on the car grants the ward reps were awarded in bid to sway them to endorse the Constitution of Kenya (Amendment) Bill (2020).

This came as counties started effecting the payments amid growing criticisms from MCAs who believe the tax is exorbitant and unfair. 

The grant was promised by President Uhuru Kenyatta during a meeting at the Sagana State Lodge.

The MCAs who are also furious over claims that some of them could have passed the wrong BBI document insists that they should not be targeted wrongly with the tax.

The Standard has established that tension is rife in several county assemblies. In five county assemblies in Nyanza, ward reps want the assembly leadership to disburse the money in full without withholding the tax.

Several clerks and finance officers who sought anonymity due to fear of reprisals from the ward reps told The Standard that it would be unlawful not to deduct the amounts. They said recovering the money from the MCAs will be difficult once they leave office.

Yesterday, county assembly officials in Kisumu, Homa Bay, Migori and Kisii counties said that the grants will be included in this month’s payslips.

“We have already prepared the payment documents and we have included the 30 per cent tax but several members are opposed to it,” said one of the clerks.

The clerks said failure to submit the tax may result in the scenario witnessed in 2017 where some county assemblies had huge un-remitted deductions and debts.

The situation hampered the efforts by some ward reps to get clearances to contest again in that poll.

“The tax must be withheld and submitted to KRA because that is what the directive says. It is also for their own good because they may not be cleared to contest because of it,” said another clerk.

On February 24, 2021, KRA issued an advisory to the Council of Governors, indicating that any payments or benefits extended to the ward reps or to the speakers should be subjected to taxation.

Risper Simiyu, the commissioner of domestic taxes, said the grant the ward reps were to receive falls in the category of income tax and thus the need to tax it.

“We wish to guide that the cash allowance in respect to the car grant is subject to tax together with other emoluments under the PAYE system in the month it is disbursed,” said Simiyu.

And now, as the county assemblies begin to effect the payments, ward reps want the process halted and are seeking to change the documents already prepared by the assemblies.

The developments mean that out of the Sh2 million each MCA is set to receive, Sh600,000 will be withheld for tax, a move MCAs oppose vehemently.

Yesterday, several MCAs admitted that they are against the proposals and instead said they should be paid the money in full the same way other groups like MPs are treated.

In Kisumu, MCAs have planned to meet on the way forward early next week to discuss the developments.

Majority leader Kenneth Onyango confirmed to The Standard that they will meet to discuss the plans to effect the car grant tax. “It is true most people do not like the issue of the tax but it is an issue we will discuss next week,” said Onyango.

He noted that the issue has been a concern among some members even as he also defended the passage of the BBI document that influenced the grants.

Railways ward MCA David Arao claimed the move to tax the money is unfair and argued that other groups have not been targeted with such taxes.

“MPs are always given car grants but they are not subjected to the tax MCAs are now being subjected to,” said Arao.

In Migori, a number of MCAs also admitted that the tax is unfair even as they admitted that they are looking forward to the payments.

Ken Ouma, the majority leader, however, said it is important that the tax is withheld and remitted to KRA as per the law.