Why the taxman should keep off our wallets

This article was first published in Nairobi Business Monthly August 2016 edition.

It is true that two things are certain, taxes and death. It is also true that we are in the information technology age where technology is becoming a major part of our lives day after day. The effect is that we now have new mediums of conducting business. We have virtual lives, virtual businesses and even virtual wallets.

It is common knowledge that a third of what is always collected by the Kenya Revenue Authority is never accounted for. The efforts of sealing this loophole never see the light of day. The taxman however, is always keen on increasing tax so as to meet targets. This year he has gone after the small-scale farmers. He also wants to snoop into every individual’s bank account and mobile money account with the aim of catching tax cheats.

He wants to profile individuals using the confidential financial data. He intends on legitimizing his deeds in the Finance Bill 2016, which raises serious human rights concerns.

Lest we forget, Thomas Hobbes in his book the Leviathan writes on how man left the state of nature so as to form the commonwealth. In our case, the commonwealth is the state, a creation of man. The state did not form man, hence man reserves the right to self-determination. If we are to carry on with the Hobbesian theory, man surrendered his absolute rights so as to co-exist with others. His rights are inherent, not granted by the state, just recognized by it. This means rights like the right to privacy, a conscience and opinion on how affairs of the state should be run are not gifts but entitlements.

All this is asserted in the Constitution of Kenya whose preamble starts with the words; “We, the people of Kenya…” The first article of the Constitution carries on with this tempo by expressly stating that:

“All sovereign power belongs to the people of Kenya and shall be exercised only in accordance with this Constitution.”

On matters to do with finance, the grundnorm as Hans Kelsen calls the supreme law; in Article 201 states the principles of public finance. The first principle of public finance is that there shall be openness and accountability. The law was drafted to include the requirement of public participation so as to achieve this objective.

The supreme law also states in Article 31 that every individual has the right to privacy. This right includes the right not to have information relating to their private affairs unnecessarily required and revealed. It also protects the privacy of an individual’s communications since they are easily infringed in this technological era. Other than the grundnorm, the other laws that protect a person’s right to privacy are laws that regulate the telecommunications industry. This industry birthed mobile money services and the law prohibits the industry service providers from sharing confidential consumer information it collects with third parties.

With the security challenges that we face as a nation, the government has pushed for enactment of laws that limit certain rights. These laws have clauses with procedures on how confidential information in the custody of a service provider can be acquired by third parties (read governmental bodies). This procedure includes the relevant governmental bodies getting a court order to compel the service provider to release the information. The taxman desires to circumvent this procedure using the Finance bill 2016.

Not the first time

The right to privacy has for a long time been under threat. It is not the first time state agencies have attempted to claw it. In 2014, the Security Laws Amendment Act was passed. In it were amendments to Section 36 of the NIS Act, which required the need of court order by the agency to access personal information. These provisions were challenged in court and were found unconstitutional in early 2015.

While so much effort is being put to claw the right to privacy, legal mechanisms that ought to be in place to protect it are not there. There has been reluctance by relevant state bodies to enact the Data Protection Bill of 2013 into law. Yet it would have played a big role in regulating the information technology industry, which is ever evolving. Every day, new innovations come with new legal challenges and the law is playing catch up.

In India, the taxman is now profiling people according to their Facebook posts. Woe unto you if you are in the business of selling impressions, for you will pay what they think you need to pay and not what you should actually pay as tax. With our ambitious Kenyan taxman, snooping into people’s mobile money accounts will catch so many ‘tax cheats’, from students who receive monies from parents to people in the rural areas who always receive money from the urban areas. The taxman is likely to create an unfair tax system that will rope in many illegible persons from the profiling he intends to do.

If people are not willing to be open with their spouses on matters to do with finances, what about the state? This push for access of personal information is not only in bad faith but also likely to be open to abuse.  We should pick a lesson from the old Arab fable of the camel nose. If the camel gets his nose in the tent, his body will soon follow. Allowing a little breach will allow more breaches to take place in the future by other bodies. And our Constitution will be nothing but an aspirational document just like its Chapter 6.

The word ’burden’ is used in the constitution to describe the duty of paying taxes. This burden ought to be shared fairly. This contribution to the national bourse further gives us the right to determine the direction that our nation takes. Be it in how we want to be governed or whether we agree to KRA using our data to create individual profiles, Article 255 gives us that right of determination through a referendum. Instead of burdening citizens with taxes, state agencies that deal with finances need to look at how it deals with the issue of graft, which bleeds our public coffers.

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