EDITORIAL: Privacy of bank accounts should be safeguarded

Reports that the Kenya Revenue Authority (KRA) has been spying on people’s and institution’s bank accounts in its effort to crack down on tax cheats raises questions about the confidentiality of banking transactions.

The privacy of accounts that firms and individuals hold in commercial banks is paramount, and needs to be safeguarded at all times except in cases where doing so is deemed injurious to the public. And to be sure, KRA detectives believe wealthy individuals and companies have concealed their transactions to deny the State some Sh250 billion in tax revenues.

But even in cases where agencies have a greater public good to serve, the procedure is such that a court order is required to obtain details of bank accounts without the holders’ consent. Yet KRA officials appear to have had no qualms at admitting that they regularly receive confidential banking details of individuals and firms in their effort to expose tax cheats. What’s more, the taxman, based on information obtained irregularly, frequently issue notices that effectively freeze the bank accounts.

In recent weeks, there has been an unprecedented number of businesses that have been forced to close shop after KRA froze their accounts over suspected tax evasion, making it impossible for the affected firms to meet their obligations, including paying suppliers and workers’ salaries.

It is also understood that KRA detectives have been prying on mobile money transfer data and other confidential transactions that individuals undertake without seeking their knowledge. While a valid concern has been raised over flagrant abuse of due process by firms and wealthy individuals to frustrate tax collection efforts, it still behoves the taxman to observe the rule of law.

KRA must rethink its tax collection strategy even as it does everything in its power to ensure that all due tax is paid. There is an obvious problem when efforts to collect taxes lead to closure of so many entities. That a country such as ours, which is up to the neck in public debt needs to do all at its disposal to collect revenues is not in doubt. The idea, however, is to devise ways of making every individual and entity to shoulder their fair share of the tax burden without destroying the very economic foundations that the society relies on to generate the revenue that the government collects from them.