No way out! You must pay - CS Ndung’u tells MPs over backdated CDF taxes

Constituencies have no choice but to pay backdated taxes on sitting allowances of NG-CDF committee members from 2003, National Treasury CS Njuguna Ndung’u has said.

Ndung’u on Thursday said the taxes must be paid by the government to ensure continued development through the NG-CDF.

“We all have to pay taxes because we cannot ask for development otherwise. Development is financed through taxes. So we have to pay taxes, there is no exemption,” Ndung’u said.

He spoke in Mombasa where he presided over the induction of new NG-CDF Board members including chair Olago Aluoch and the signing ceremony of their appointment letters.

On Wednesday, Mvita MP Masoud Machele protested the move by the Kenya Revenue Authority to impose the taxes and then backdate them to 2003.

In Mvita, KRA wants to deduct as much as Sh5 million from the NG-CDF account.

“Sh2 million is a principle, Sh500,000 is penalties and another Sh2.5 million is in interests,” Machele said.

He appealed to the NG-CDF Board to intervene.

On Thursday, Aluoch insisted there would be talks with KRA and the National Treasury and his sentiments were echoed by CS Ndung’u.

“Complaint is one thing. KRA’s doors are open to discuss any sources of complaints. But let’s take it that taxes must be paid because otherwise, we cannot finance our development,” Ndung’u said.

“You all ask for the resources. Where do they come from? They come from taxes. So essentially we cannot chase our shadows,” the CS noted.

He stressed that any agreement out of any discussions with KRA must be implemented to the fullest.

“Let’s not argue or make an assumption that there would be a leeway. Taxes must be paid because that is the only way we can finance our development. This is the Bottom-Up Economic Transformation Agenda,” Ndung’u said.

He said Beta means economically lifting that person at the grassroots who has been left behind and for this to happen, taxes must be paid.

“Let’s not kill the goose that will lay the golden egg,” he said.

The CS noted that Kenya, like many other countries, has had layers of crises including COVID-19, drought, Ukraine crisis, fuel prices and food crisis, among others that have combined to put the country in a precarious economic situation.

Liquidity crises are mostly short-term crises, unlike solvency crises, and how they are solved matters a lot because if not handled well may create even worse solvency challenges, Ndung’u said.

He warned MPs that not all the times will they get the NG-CDF funds when they need it.

He said sometimes the government has to make tough decisions to keep the country afloat.

This, he noted, includes prioritizing some things over others.

Paying public debt, for example, is one of the government’s priorities and it will do all it can to ensure it does not fall into that defaulting trap.

“Most of you would not like to see me in jail for having defaulted on public debt, isn’t it?” he said.

“In March when we were late even paying salaries, we said we could do anything possible to make sure that we don’t default on public dealt. Kenyans can wait for the next month to be paid. And even we paid in arrears.

“So it is the same message we want to tell our MPs. We know at the grassroots level they are under so much pressure. But at the same time they can still hold on a bit,” Ndung’u said.

He warned that the board will be under extreme pressure from MPs over NG-CDF which he intimated may at times be delayed.

“Life never gives us what we want at the moment we see it appropriate. That is the reality of the world. Resources for development are very important. Resources that we get we use sparingly. That is the whole doctrine of economic management and development,” the CS said.

Ndung’u said the NG-CDF must be provided to constituencies but only when there are resources and not when the MPs demand it.

“Remember during the drought, we had to shift a lot of development resources to save lives. So in a sense, you end up having some liquidity challenges and that is what we have to manage in the short term,” he noted.

He said the NG-CDF has created the desired impact at the grassroots and the government intends to continue supporting that trend, with or without resources.

“Even goodwill is good enough,” he said.

He said having cash challenges does not mean people will die.

Instead, he noted, the government will work hard to get the money, and use it sparingly, to ensure whatever the NG-CDF does is impactful at the constituency level.

Aluoch said the government’s goodwill is key to realizing development at the grassroots level through the NG-CDF.

The former Kisumu West MP said CS Ndung’u has demonstrated that his door is open to all and that he is ready for consultation if it means salvaging a dire situation.

He reiterated that the board will act as a bridge between the National Treasury ministry and Parliament to ensure a smooth floor of information and communication, the prerequisite for development through the NG-CDF.

“We want to make sure that his office is not put under pressure by MPs. If there are liquidity challenges we should be able to appreciate that,” Aluoch said.

He said the board will build on the goodwill that the ministry has.