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Friday 1st March

Issue 9/2013

CASE OF THE WEEK

 

MEMBERS OF THE NATIONAL ASSEMBLY TO PAY TAX ON ALL INCOME

Rev Dr Timothy Njoya & 17 Others v Attorney General & 218 Others
High Court at Nairobi
Petition No 137 of 2011
M Warsame J
January 17, 2013
Reported by Andrew Halonyere

The High Court in Nairobi ruled that all State Officers including Members of Parliament, under the Constitution of Kenya 2010, were under an obligation to pay taxes. Justice Warsame held that to allow members of the National Assembly to be exempted from income tax on their allowances while other workers pay taxes on all income was discriminatory.
The ruling was as a result of a Petition seeking inter-alia, a declaration that, under the Constitution of Kenya 2010, all State Officers, including Members of Parliament were under an obligation to pay tax as per Article 210 as read with Article 201 and 230 of the Constitution and that the Head of the Civil Service and Secretary to the Cabinet or the Attorney General, or the President and the Prime Minister had no powers or authority to exempt any state officer from payment of tax.
Issues

  1. What happens when there is a direct and clear conflict between the transitional and consequential provisions, and the substantive provisions of the Constitution?
  2. Whether the National Assembly under Section 10 of the Sixth Schedule to the Constitution of Kenya, 2010 implies that its members would be exempted from paying taxes on their allowances.
  3. Whether there is a legitimate expectation by virtue of the existence of the National Assembly Remuneration Act (Cap 5) and section 6 of the Sixth Schedule to the Constitution.
  4. Whether the taxation of allowances of Members of Parliament would amount to a violation of their right to property as envisaged under Article 40 of the Constitution of Kenya, 2010.
  5. Whether the executive arm of Government has powers to exempt any state officer from payment of tax.
  6. Whether the High Court had jurisdiction to assess the amount of tax that is payable by anyone.

Constitution of Kenya, 2010
Article 210(1) – provides that there shall be no imposition, waiver or variation of tax or licensing fee except by legislation

Article 210(3) – provides that no law may exclude or authorize exclusion of a state officer from payment of tax

Article 262 - Gives effect to the Transitional and Consequential provisions set out in the Sixth Schedule to the Constitution. The Article also preserves certain rights of Members of the National Assembly as presently constituted until the expiry of their term

Article 230 – provides that review of salaries of State Officers to be the exclusive duty of the Salaries and Remuneration Commission

National Assembly Remuneration Act section 5 (Cap 5)provides that All allowances payable under the Act shall be exempt from income tax notwithstanding the provisions of any other written law relating to income tax.

Held

  1. The transitional provisions contained in the Sixth Schedule to the Constitution of Kenya, 2010 were intended to assist in the transition into the new order, but were limited in time and in operation and were to remain in force for the period provided in order to achieve the aspirations of Kenyans in moving into the new order. These transitional provisions were as much a part of the Constitution and as much an expression of the sovereign will of the people as the main body of the Constitution.
  2. The Constitution must be read as an integrated whole, and that where there was a conflict between substantive provision and transitional provisions, then the substantive provisions of the Constitution would prevail. The role of the transitional clauses in the Constitution was to ensure a smooth shift from the old to the new order, while the role of the Constitution was to address and correct past injustices, and ensure that the citizens’ rights are protected in the future.
  1. The National Assembly Remuneration Act would continue to be in force with regard to the remuneration of the members of the National Assembly. That legislation was enacted before the promulgation of the Constitution of Kenya 2010. The Act however, had to by virtue of section 7 of the Sixth Schedule to the Constitution, be brought into conformity with the Constitution. As a result, any legislation made by parliament or agreement that was made in violation of the provisions of the Constitution was void.

  2. Nothing in the substantive provisions of the Constitution or in the Transitional and Consequential provisions in the Sixth Schedule had suggested that any class of state officers would have been exempted from paying taxes on any part of their income.  Had the intention been to exempt any state officers from the obligation of payment of tax, then that would have been expressly stated.
  1. Article 210 of the Constitution provides that where it was envisaged that there would be a waiver or exemption from taxation, then it must have been legislated and must also have been reported to the Auditor General. Therefore it was not possible to claim that Members of the National Assembly had a right not to pay taxes on their allowances, exemption from taxation is a privilege, and not a right.

  2. There was no legitimate expectation that Members of the National Assembly would have been exempted from payment of taxes.

  3. The right to property under the Constitution encompassed the right to acquire and own any property, such as land, goods, intellectual property, money or negotiable instruments. The right to property did not encompass the right to be paid tax-free allowances for members of the National Assembly or for any sector of the society.

  4. Article 210 had no exclusion or exemption in matters of taxation.  Deviations were subject to judicial scrutiny. Any deviations must not have been such as to deprive citizens of fair, transparent and effective tax regimes which were applicable to all in equal measure
  1. Taxation was a civil duty, and under the Constitution, all State Officers are under an obligation to pay tax. Due to the supremacy of the Constitution, and the fact that the Constitution bound all people, as well as the state, there could not have been any agreement that could exempt any State Officer from payment of tax.

  2. By virtue of section 3 (2) of the Sixth Schedule to the Constitution, the members of the National Assembly were entitled to set their own terms and benefits. That entitlement was however extinguished once the Salaries and Remuneration Commission was established. The court therefore did not have the jurisdiction to determine the amount of taxes that any person could pay. The court was also not in a position to determine the manner in which the National Assembly should allocate public money.

  3. The executive could not have donated an illegal or unlawful benefit and if it did, it was an act done in violation or contravention of the clear provisions of the Constitution, notwithstanding the consequences of the contravention. Equally, parliament or parliamentarians were not entitled to accept an unlawful advancement of monies belonging to the citizens of Kenya.

Petition allowed

 

SELECTED NOTICES FROM THE KENYA GAZETTE

 

Kenya Gazette Vol. CXV – No. 32  Dated March 1, 2013

The State Corporations Act–Appointment.
The Coast Development Authority Act - Appointment.
The Ewaso Ngiro North River Basin Development Authority Act - Appointment.
The Labour Relations Act - Deduction of Agency Fees.
The Public Procurement and Disposal Act - Appointment.
The Registration of Titles Act - Issue of Provisional Certificates, etc.
The Registered Land Act - Issue of New Land Title Deeds, etc.
Public Service Commission of Kenya - Administrative Officers Examination Results.
The Kenya Power and Lighting Company Limited - Fuel Cost Charge.
Probate and Administration.

SUPPLEMENT Nos. 36, 37, 38 and 39
Act, 2013
The Pyrethrum Act, 2013.
The Statutory Instruments Act, 2013.
The Social Assistance Act, 2013.
The Sports Act, 2013.

GAZETTE NOTICE NO. 2618
THE STATE CORPORATIONS ACT
(Cap. 446)
THE KENYA NUCLEAR ELECTRICITY BOARD
APPOINTMENT

IN EXERCISE of the powers conferred by section 6 (1) (e) of the State Corporations Act, the Minister for Energy appoints –

David Maina,
Joseph Malo,
Jane Dwasi,
Eva Gichunge,
Nyanchaga Nyangeri,

to be members of the Kenya Nuclear Electricity Board for a period of three (3) years, with effect from the 21st February, 2013.

Dated the 19th February, 2013.

KIRAITU MURUNGI,
Minister for Energy.

GAZETTE NOTICE NO. 2619
THE COAST DEVELOPMENT AUTHORITY ACT
(Cap. 449)
APPOINTMENT

IN EXERCISE of the powers conferred by section 10 (1) of the Coast Development Authority Act, the Minister for Regional Development Authorities appoints–

JAMES KAHINDI MANGI,

to be Managing Director and Secretary to the Board of Management of the Coast Development Authority, for a period of three (3) years, with effect from the 15th February, 2013.

Dated the 14th February, 2013.

F. O. GUMO,
Minister for Regional Development Authorities.

GAZETTE NOTICE NO. 2620
THE EWASO NGIRO NORTH RIVER BASIN DEVELOPMENT
AUTHORITY ACT
(Cap. 448)
APPOINTMENT

IN EXERCISE of the powers conferred by section 9 (1) of the Ewaso Ngiro North River Basin Development Authority Act, the Minister for Regional Development Authorities appoints–

OMAR MOHAMED SHEIKH

to be Managing Director and Secretary to the Board of Management of the Ewaso Ngiro North River Basin Development Authority, for a period of three (3) years, with effect from the 15th February, 2013.

Dated the 14th February, 2013.

F. O. GUMO,
Minister for Regional Development Authorities.

GAZETTE NOTICE NO. 2621
THE LABOUR RELATIONS ACT
(No. 14 of 2007)
DEDUCTION OF AGENCY FEES

IN EXERCISE of the powers conferred by section 49 (1) of the Labour Relations Act (No. 14 of 2007), the Minister for Labour makes the following Order:

(a) Rift Valley Railways (K) Limited, (RVRK) to deduct a sum equal to KSh. 300 from each unionsable employee who is not a member of the Railways Workers’ Union (k) herein referred to as the “union” but is benefiting from terms and conditions of the Collective Bargaining Agreement (RCA) 179 of 2012) signed between the union and the company.

(b) Deductions to commence within thirty (30) days of receiving the Order.

(c) To remit within ten (10) days, the sums deducted under Item (a) by crossed cheque made payable to the union’s account No. 1107082668 at Kenya Commercial Bank, Moi Avenue Branch, Nairobi.

Dated the 20th February, 2013

JOHN MUNYES,
Minister for Labour.
MR/1775584

GAZETTE NOTICE NO. 2622
THE PUBLIC PROCUREMENT AND DISPOSAL ACT
(No. 3 of 2005)
APPOINTMENT

IN EXERCISE of the powers conferred by section 26 (4) of the Public Procurement and Disposal Act, and second schedule of the Public Procurement and Disposal Regulations, 2006, the Permanent Secretary, Ministry of State for National Heritage and Culture, appoints -

Amb. Ann B. Nyikuli - (Chairperson),
Ann Kamau - (Deputy Chairperson),
John M’Reria,
Rufus Thuku,
D. M. Gatuku,
Francis Kanyenze,
Joseph Mwangi,
Kennedy Ndwiga,
Joshua Opondo,
Mary Mwangi,

to be members of the Ministerial Tender Committee for the Financial Year 2012–2013, with immediate effect.

Dated the 27th July, 2012.

M. N. MWANGI,
for Permanent Secretary.
MR/1717401

Special Issue
Gazette Vol CXV – No 31 Dated February 26, 2013
GAZETTE NOTICE NO. 2617
THE PUBLIC HOLIDAYS ACT (Cap. 110)
DECLARATION OF A PUBLIC HOLIDAY

IT IS notified for general information that Monday, 4th March, 2013, will be a public holiday to allow workers to go and vote.

Dated the 26th February, 2013.

F. T. KIMEMIA, Permanent Secretary,
Secretary to the Cabinet and Head of the Public Service


Special Issue

Gazette Vol CXV – No 30 Dated February 26, 2013
GAZETTE NOTICE NO. 2613
THE NATIONAL POLICE SERVICE ACT
(No. 11A of 2011)
APPOINTMENT

IN EXERCISE of the powers conferred by section 72 of the National Police Service Act, 2011, as read with Article 247 of the Constitution of Kenya 2010, the Inspector-General of the National Police Service appoints the officers of the Kenya Prisons Service set out in the Gazette Notice, as special police officers for a period from 2nd  March, 2013 to 18th June, 2013 within the country during 2013 General Elections.

Dated this 26th February, 2013.

DAVID M. KIMAIYO,
Inspector-General of the National Police Service.

National Council for Law Reporting
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