• SRC told CoB that the conversion of the car loan into a car grant will be done administratively between county governments and MCAs.
• The SRC agreed to convert the car loan facility to a car grant, which it said would come at no extra expense from the Sh4.5 billion allocated.
Image: COURTESY
It is now official that the Sh2 million car grant advanced to MCAs as a sweetener to pass the BBI bill will be subjected to a 30 per cent tax regime.
The details emerged as the Salaries and Remuneration Commission brushed aside a letter by the Controller of Budget seeking clarification on how the grant would be rolled out.
In a letter to Council of Governors chairman Martin Wambora, the Kenya Revenue Authority said the Sh4.5 billion car grant would be subjected to income tax.
This means that each of the slightly over 2,000 MCAs and speakers will have to forfeit Sh600,000.
“We note that MCAs and speakers are employees of respective county governments. Hence, any payments or benefits extended to them by their governments is treated as income from employment or services rendered,” Commissioner for Domestic Taxes Rispah Simiyu told CoG in a letter dated February 24.
Simiyu said the car grant shall fall under the category of an income earned under “other allowances”.
“We wish to guide that the cash allowance in respect of car grant is subject to a tax together with other emoluments under the PAYE system in the month in which they are disbursed to the beneficiaries at the appropriate individual rate of taxes applicable,” she said.
“However, since the cadre of staff are in the higher tax bracket of 30 per cent, the car grant allowance falls within the 30 per cent bracket.”
On Wednesday, SRC chairperson Lyn Mengich, in a letter seen by the Star, pointed out that she was clear that the process will be done administratively between county governments and MCAs.
“As per the guidance of SRC to the Council of Governors and the county governments, the operationalisation of conversion of the car loan for the speaker and member of county assembly to Transport Facilitation Benefit in the form of a car grant is to be undertaken administratively by the respective county governments,” Mengich said.
On February 9, the SRC issued a circular to governors approving the car grants for MCAs and speakers.
The SRC agreed to convert the car loan facility into a car grant, which it said would come at no extra expense from the Sh4.5 billion allocated.
The commission said upon conversion, the existing car loan the county reps are now servicing shall cease.
Speakers and MCAs who have benefited from the existing car loan shall convert their car loan to transport facilitation benefit in the form of a car grant.
In a letter dated February 17, the Controller of Budget sought an advisory on how to convert a car loan facility into a car grant.
The CoB also wanted the SRC to be clear on how to handle requests to authorise withdrawals from county revenue funds to finance car grants.
The CoB said most counties merged the car loan and the mortgage facility into one fund.
“Some counties are operating one mortgage and one car loan fund for the staff and members of the county assembly. It should be noted that in some counties, the fund is not fully funded,” the letter stated.
County Assemblies Forum secretary Kipkirui Chepkwony said the CoB has no role in approving the funds.
Speaking to the Star on the phone, the Tinderet MCA in Nandi said, “The CoB just wanted to put hurdles in the process that was about converting an existing loan into a grant”.
“The discussion has been ongoing since 2014 when we brought the matter before the SRC. That is why it gave us clearance at first for car loans and mortgages because the dynamics were still being worked around,” he said.
Kipkirui called on the CoB to allow the county governments and the MCAs to “deal with the matter administratively as advised by SCR”, noting that the majority of assemblies have finalised the exercise.
“Since members of the National Assembly and the Senate are benefiting from it, that has been our argument all along. The issue of CoB coming in is irrelevant," he said.
"We are not going back to CoB to ask for money, but this is money already within the assemblies. CoB has no role whatsoever in this. We have already created a revolving fund in the assembly. We are not going back to the county revenue fund,” he said.