17 June 2024 | 09:09 AM

Advocacy: Con Court ends total tax secrecy

Key Takeaways

  • Court rules total tax secrecy is unconstitutional
  • Safeguards contained in access to information law remain
  • SARS must reconsider request for Zuma’s tax records


The Constitutional Court’s ruling that the media and other third parties can access tax records under circumstances of overwhelming public interest is a victory for transparency and accountability.

Although the case originated in an application by the Financial Mail and amaBhungane for access to former President Jacob Zuma’s tax records, the judgment is not only about the former president’s questionable financial affairs.

It cements the constitutional right of access to information and contributes to a growing recognition that transparency is the only way those in power and with power can be held to account.

In his majority judgment, Judge Jody Kollapen noted that “given our own history of subjugation and oppression, freedom of expression has now come to occupy an esteemed place in our constitutional order”.

He acknowledged that the total tax secrecy regimes in the United Kingdom and Canada and the more open disclosure regimes in Sweden and Slovenia had been mentioned in the case but said that the central question for the Court was whether South Africa’s legislation – which created a total secrecy tax regime – “stands up to our constitutional framework”.

The Court found that it did not, and in so doing, provided the media and the public with yet another resource through which to hold the powerful to account.

And so, with a nod to the importance of countries shaping their laws with reference to that “country’s own history and its trajectory for the future”, the Court held that it was unconstitutional to have a tax secrecy regime which excluded the reach of our constitutionally mandated transparency law, the Promotion of Access to Information Act (PAIA).

PAIA does allow for sensitive information to be withheld. 

But it also says even highly confidential information must be disclosed if the disclosure would reveal evidence of “a substantial contravention of or failure to comply with the law”; or of “an imminent and serious public safety or environmental risk” – and, in addition, if the public interest in the disclosure “clearly outweighs” the harm such disclosure might cause.

Until now, taxpayer information was the sole exception and was specifically excluded from what is known as the “public interest override” clause in PAIA.

Judge Kollapen found this exclusion was unjustified and set it aside.

The question now is: whose records should be made public and whose should stay secret?

Speaking truth to power

We need not look further than State Capture to recognise how vital freedom of expression has been in our democracy.

Without the media’s reporting through the #GuptaLeaks, it is doubtful whether the scale of corruption within Zuma’s administration would have been exposed. And more recently, reporting into Covid-19-related procurement scandals, corruption within hospitals and in water provision, and at Eskom continually reminds us of the role freedom of expression and access to information plays in a functioning democracy. 

In many of amaBhungane’s stories, the people or corporations we investigate use financial instruments to hide irregular payments and bribes or to launder money.

But the wall of secrecy that has surrounded SARS has been impenetrable, and has prevented us from getting a full understanding of the payments made and received in these corruption and money laundering networks.

SARS argued in court that total tax secrecy was crucial to tax-payer compliance, but Judge Kollapen rejected this argument.

“There is no basis in principle, nor in terms of any evidence, that absolute confidentiality is required to achieve taxpayer compliance. On the contrary, while most taxpayers might assume that in general their tax information will be protected, it is another matter to suggest that such taxpayers may also insist, as a condition of compliance, that information that evidences serious criminality or a public risk will also be the subject of protection.”

Indeed, in amaBhungane’s experience, tax secrecy can be abused by powerful individuals and businesses to evade legitimate scrutiny and game the system.

And this is why we joined the Financial Mail in this case.

This judgment will not impact the ordinary taxpayer. The bar to disclosure in terms of the public interest override is set high, as Judge Kollapen points out. The general right to privacy of the individual taxpayer remains and will be respected.

That right, however, is not absolute, and when there is a serious and compelling public interest in confidential tax information the ruling means that the competing right to access to information should prevail.

Who decides?

There are strict conditions for when SARS will be able to determine that the public interest justifies the release of tax records.

It can only disclose the information on application in terms of PAIA.

This act has a number of safeguards, in addition to the high bar set by the public interest override.

It requires that if SARS is considering disclosure of taxpayer information in terms of the override, the tax authorities will have to contact that taxpayer and give them the chance to oppose the release of the information.

SARS is then bound to consider the taxpayer’s representations when making its decision.

This is what is likely to happen now with the application for access to Zuma’s tax information, which the court said should be resubmitted for consideration by SARS.

Past experience tells us that SARS will try to keep that bar very high – notwithstanding allegations (denied by Zuma) submitted in this case that the former president had evaded tax while in office and had failed to disclose other sources of income he received.

Nevertheless, by expanding the scope of PAIA to taxpayer information, the Court has closed a gap in our transparency framework.

There is no place for absolute confidentiality in a society committed to accountability. Corruption and undue influence are fueled by illicit payments, and evade accountability through secretive financial systems.

From now, criminals have one less place to hide.

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Caroline James

Caroline joined amaBhungane in 2022. As a lawyer Caroline’s interests are in freedom of expression, access to information and state accountability and has sought to weave those interests together in her work and academic study. She has BA (Honours) and LLB degrees from Wits University and an MA from Queen’s University in Canada where her thesis was on inconsistent global standards on accountability for corruption. Caroline has worked at the Southern Africa Litigation Centre and Corruption Watch and consulted for the Open Contracting Partnership.

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