2009-05-04 11:51:00 Businesses: Tax end-of-term gratuity By Samuel Kamndaya THE CITIZENThe gratuity that MPs receive at the end of their terms should be taxed, it has been proposed. The latest move to limit MP�s pay is quietly being championed by members of the business community, according to our investigations. It will be the third time in recent weeks that a major public organisation is taking a stand against attempts to award high salaries and other emoluments to the country�s 320 MPs. The Catholic Church has separately distributed to all its churches across the country, a communication document highlighting a comprehensive programme to guide the faithful towards next year�s general elections and among items included is opposition to higher pay for the MPs. "We must push for a review of those benefits to bring them down to normal," the Church says of the allowances enjoyed by legislators. The Tanzania Media Women Association (Tanwa) has also cautioned of the danger of widening the gap between MPs' salaries and those to civil servants. Earlier it was Karatu MP Willibrod Slaa who took the crusade to fellow parliamentarians, arguing that their pay was �obscene� when compared with the living standards of other Tanzanians whom, he said, suffered as a result of a lack of essential social services. It was Dr Slaa who revealed publicly that an MP was pocketing a whopping Sh7 million per month in addition to Sh135, 000 that each earns as daily sitting allowance during parliamentary sessions. Dr Slaa earned the wrath of Speaker Samuel Sitta who accused the opposition legislator of allegedly distorting the information about MPs' pay to antagonise them with the public. Mr Sitta has also been quoted in the media as wondering why the media and other groups were interested in the MPs� salaries. The speaker said the debate could divert attention from other crucial national business, and pointed out that there were public servants who earned more. According to Mr Sitta, MPs would be earning nearly Sh15 million if all factors were considered. They are currently proposing to raise their pay package to Sh12 million per month. It is expected that a new proposal by the Tanzania Private Sector Foundation (TPSF) targeting gratuity payment to the MPs will make the debate even more heated. The body is proposing that the lawmakers' gratuity, standing at a flat rate of Sh20 million after at the end of each term, be taxed. They want the Government to repeal a section in the Income Tax Act of 2004 that grants a tax exemption on lawmakers� gratuity. Normally, each MP gets an untaxed gratuity of at least Sh20million at the end of his/her five-year term in Parliament. But according to proposals, presented to the Task Force on Tax Reforms as part of preparations for the 2009/2010 Budget, businesspeople want the Government to tax the lawmakers� gratuity as is the case with other gratuity payments. "A gratuity granted to a Member of Parliament at the end of each term should be repealed so that a gratuity granted to a Member of Parliament may also be taxed like it is with other gratuity payments," says part of a report by members of the business community through Tanzania Private sector Foundation presented to the taskforce. Taxpayers would foot a bill of Sh6.4 billion as gratuity handouts to the 320 MPs ahead of the 2010 General Election. If this amount were to be taxed at 30 per cent, the Government would save about Sh2 billion. The TPSF report, compiled by Mr Felician Busigara, a tax and management consultant, and presented to the Task Force on Tax Reforms on March 20, notes that such exemptions were "discriminatory", hence the need to abolish them during presentation of the country�s 2009/2010 Budget. In the report, the business community wants the Government to rescind what is termed as "discriminatory exemptions", which are granted through the Income Tax Act, 2004. Other issues highlighted in the report include the need for the Government to charge its own employees a tax on benefits derived from the use of residential premises. Presently, Section 7 (3) of the Income Tax Act, 2004 exempts benefits derived from the use of residential premises by an employee of the government or any institution whose budget is fully or substantively out of government budget subvention. While businesspeople want MPs' gratuity to be taxed, a debate still rages on a recently passed bill that would see lawmakers� salaries increase significantly in the next few months. Tanzanian MPs, currently earn about Sh6.9 million (about $5,292) per month. The amount excludes Bunge sitting allowances and allowances obtained through MPs� membership in various boards. Out of the money, only Sh1.8 million is their taxable basic salary. The recently passed bill will facilitate an increase of a MP�s basic salary to Sh3 million and additional allowances to Sh9 million. And Tanzania Gender Networking Programme (TGNP) has joined in the fray. According to TGNP, the new salaries are unjustifiable because it comes at a time when the world is reeling from the worst economic crisis to hit the world since the great depression. Above all, the bill comes at a time when a majority of Tanzanian citizens, the very seed capital for MPs to obtain their seats, are still living on less than $2 (Sh2,600) a day. "TGNP is saddened by the debate in and outside the National assembly�many citizens have been equally saddened by the MPs� step especially due to the fact that it comes at a time when the world faces an economic crisis," TNGP�s executive director, Ussu Mallya, said in a press statement made available to The Citizen during the weekend. In its statement, TGNP proposes that the government should instead initiate a special body to oversee whether money given to lawmakers is really spent through the prescribed means. "We need the initiation of a body to see how much of the money given to MPs is spent on official use, research, payments to a MP�s assistants and a driver as stipulated in the passed bill," says TNBC. Analysts say, the proposed Sh12million package would put the country's MPs close to their Kenyan counterparts who each earn a monthly payment of Ksh851,000 (about Sh14.4million) of which only the basic salary of Ksh200,000 (about Sh3.4million) is taxed. At the same time, Ugandan lawmakers pocket just Ush2.6million (about Sh1.6million) in base monthly salary and Ush7million (about Sh4.25million) including night, subsistence and fuel allowances, according to The Monitor newspaper.