In a significant victory for privacy rights and legal oversight, a contentious proposal within Kenya's Finance Bill 2025/2026, which aimed to grant the Kenya Revenue Authority (KRA) extensive access to taxpayers' personal and financial data, has been decisively dropped. The National Assembly, after robust debate and overwhelming opposition from Members of Parliament, passed the revised Finance Bill 2025 by acclamation on Thursday afternoon, paving the way for it to be signed into law by the President without this controversial clause.
The now-scrapped provision would have bestowed upon the KRA seemingly unrestricted access to sensitive personal information, including mobile money and bank transactions, along with valuable trade secrets. This sweeping power was intended as a measure to crack down on pervasive tax evasion, a persistent challenge for the national treasury. However, its broad scope and potential for infringement on fundamental rights quickly ignited a firestorm of opposition from various quarters, including legal experts, civil society organizations, and concerned citizens.
The parliamentary Finance Committee, chaired by Molo MP Kuria Kimani, played a pivotal role in reviewing the contentious clause. In its comprehensive report on the Bill, the Committee meticulously deliberated on the proposal, ultimately concluding that the provision for KRA to access personal data failed to meet the constitutional threshold. Specifically, the Committee referenced Article 31(c) and (d) of the Constitution of Kenya, which unequivocally guarantees every individual the fundamental right to privacy. This constitutional safeguard ensures that personal information, including financial data, is protected from unwarranted intrusion by state entities.
Furthermore, the Committee's decision was reinforced by Section 51 of the Data Protection Act, a crucial piece of legislation that outlines specific, stringent conditions under which exemptions to data protection may be permitted. The MPs on the Committee emphasized that any access to personal data by state agencies must strictly adhere to these outlined conditions, ensuring a delicate balance between public interest and individual rights.
The Committee further underscored that the existing legal framework already provides sufficient authority for the tax authority to access relevant data. Crucially, this existing framework mandates that KRA must obtain a judicial warrant before accessing such sensitive information. This requirement ensures that tax enforcement powers are exercised within a robust framework of legal oversight and due process, preventing arbitrary or unchecked intrusion into citizens' private financial lives. As the MPs in the committee asserted, this mechanism safeguards fundamental rights while still enabling KRA to perform its legitimate duty of revenue collection.
The controversial proposal had been repeatedly defended by Treasury Cabinet Secretary John Mbadi, who argued it was a necessary step to enhance tax compliance. Mbadi publicly cited the challenges of voluntary compliance, even among high-income earners, as a rationale for the proposed sweeping powers. "If it were up to us, even those earning well like me would not be honest in paying taxes. I will probably return 50-60 per cent of what I am supposed to," Mbadi told Citizen TV last week, suggesting a natural human inclination to avoid tax obligations. He contended that "People love convenience, especially where money is involved. If you just let Kenyans pay taxes at will without being followed up, they will not."
Similarly, KRA Chairperson Ndiritu Muriithi had echoed these sentiments, arguing that granting KRA such powers would significantly enhance revenue collections and effectively seal existing tax evasion loopholes. Muriithi highlighted a significant compliance gap, noting that out of the 20 million Kenyans registered for KRA PINs, only approximately 10 million actually file their tax returns, with a substantial majority (six million) filing nil returns. These statistics underscore the KRA's legitimate concerns about tax evasion and the need to broaden the tax base.
However, the parliamentary decision reflects a clear prioritization of constitutional rights and due process over unchecked executive power. While the imperative to increase tax collection remains, Parliament has signaled that this must be achieved within the confines of established legal frameworks and with strict respect for citizens' privacy. The rejection of this proposal marks a significant moment for accountability and reinforces the principle that fundamental rights cannot be easily overridden, even in the pursuit of national revenue goals. This outcome represents a crucial balance between the state's need to generate revenue and the individual's right to privacy in a democratic society.
