OFFICE OF THE DEPUTY PRIME MINISTER &

MINISTRY OF FINANCE

PRESS STATEMENT ON ADOPTION OF AKIWUMI TRIBUNAL

REPORT ON TERMS AND CONDITIONS OF SERVICE OF MPS

1. As members of the public are aware, Parliament

adopted the recommendations of the
Parliamentary Service Commission (PSC) that
were based on the report of the Akiwumi
Tribunal. The Tribunal was appointed
following the concerns of the public on the
reportedly high salaries of the members of the
National Assembly and the question of paying
taxes on allowances. Parliament also passed a
resolution that directs me to present to the
House the necessary Bills amending the
relevant legislations.

2. The public will also recall that I presented the

Budget Estimates for the Financial Year
2010/11 on 10th June 2010. These estimates do
not include any additional allocations to the
National Assembly for salaries and other
benefits. The budget estimates as presented had
exhausted the resource envelope that could be
realistically mobilized. Therefore, the
additional expenditures can only be financed
either through additional borrowing or
imposition of higher taxes, both of which have
far reaching adverse economic and social
consequences. Members of the public will also
 recall that in the budget, I stated that Treasury
had taken austerity measures to generate
additional savings from recurrent expenditures
for financing critical development expenditures
particularly roads, energy and water.

3. As stated in our Budget Policy Statement,

recurrent expenditures consume about 97
percent of ordinary revenue, leaving a paltry 3
percent for development expenditures. This is
clearly not sustainable and is inconsistent with
our development objectives stated in Vision
2030. Indeed, this position has been supported
by Members of Parliament. Hon. Members
have also been vocal against excessive
borrowing and we agree with them. As
representatives of the people, Hon. Members of
Parliament have equally advised and rightly so,
on the need to reduce the tax burden on
Kenyans.

4. It is also important to note that we have been

pursuing a policy framework that is supportive
of the private sector through enhanced
competitiveness. The actions taken by Hon
Members are not supportive of these noble
objectives because they will trigger demands
for salary increment by other sectors.
Consequently, these will lead to a wage spiral,
hence creating inflation and weakening our
competitiveness. This is even more critical now
that we are in a Common Market for the East
African Community, because our goods will be
more expensive relative to those of other
member countries.

5. For these reasons, we are have initiated a

process to further engage the Hon. Members to
discuss way in which these issues can be
addressed. We are confident that Members of
Parliament will once again rise to the occasion

2
 to ensure this matter is resolved satisfactorily
for the good of our country.

HON. UHURU KENYATTA, EGH, MP.

DEPUTY PRIME MINISTER AND MINISTER FOR FINANCE

July 2, 2010