Media houses on Tuesday won a court battle for access to Jacob Zuma’s tax records in the years he served as president.
The Pretoria high court ordered the South African Revenue Service (Sars), the first respondent in the matter, to hand Zuma’s individual tax returns for the 2010 to 2018 financial years to the applicants, the Financial Mail and investigative journalism unit amaBhungane, within 10 days.
The two media houses went to court in May, arguing that when the tax compliance of a head of state is in question, they should be able to invoke their rights of access to information, and, if there is a statutory hindrance to this, they should be allowed to challenge its constitutionality.
The allegations of noncompliance that made disclosure imperative, they argued, included that Zuma never filed tax returns for the first seven of his nine years in office; that he owed millions in unpaid taxes for the benefits derived from the tax-funded improvements to his home in Nkandla; and that he received money from illicit sources, including the Gupta family and tobacco smugglers.
The ruling by Judge Norman Davis has far-reaching consequences for the scheme of legislation that prohibits the media from accessing taxpayers’ information in the public interest, and found provisions of the Tax Administration Act and the Promotion of Access to Information Act (Paia) unconstitutional.
The case dealt with the tension, Davis noted, between the competing rights of privacy and the right to access to information, both of which are enshrined in the Bill of Rights.
Zuma, the third respondent, did not oppose the application or file any court papers addressing the allegations that he evaded paying tax. Nor did he attempt to confirm that he was, in fact, tax compliant.
But Sars opposed the application — as did the ministers of justice and finance — arguing that its obligations under the Tax Administration Act to preserve the secrecy of taxpayers’ information precluded it from disclosing it to anybody who is not an official at the revenue service.
It relied on sections 34(1) and 35(1) of Paia to refuse access to Zuma’s tax records. The first of the two sections holds that access may be refused should it lead to unreasonable disclosure.
The second goes further still and states that disclosure of information obtained to enforce compliance with tax laws must be refused if it relates to a third party. Critically, the so-called public interest override, enshrined in section 46 of Paia, does not apply to cases in which access to tax records are requested.
Sars had argued that this near-blanket secrecy was essential to preserve a pact between the revenue service and taxpayers whereby, in return for their full and honest disclosure, “Sars promises to keep their secrets.”
“Without this statutory guarantee of confidentiality, the expectation that the taxpayer will be candid with Sars diminishes. The compact, written into law … is the foundation of the tax system, without which the tax system cannot function properly,” it argued in its papers.
But Davis said there was cause to doubt that this was the real mechanism whereby the revenue service ensured compliance. It was far more likely that taxpayers complied for fear of prosecution, rather than as a trade-off for the preservation of their privacy.
“To put it bluntly, there is no direct or factual evidence that taxpayers in South Africa rather make disclosure of their affairs because of the secrecy provisions as opposed to the coercion of the penalties and sanctions which follow upon nondisclosure,” he said.
Davis said the section 46 public interest override applied to a range of matters of weighty confidentiality, including national and trade secrets, and that Sars carried the onus to prove that the limitation it placed on access to information was justifiable in an open, democratic society.
He found that the limitation imposed on freedom of information as protected under section 32 of the Constitution was not justified, whereas extending the public interest override to such information was justified.
Accordingly, he ruled that sections 35 and 46 of Paia were unconstitutional where they preclude access to tax records, even where the normal requirements for public interest disclosure have been met.
Davis also ruled that sections 67 and 69 of the Tax Administration Act were similarly unconstitutional where they precluded disclosure even when these requirements were met, and further precluded anybody from publishing tax information obtained by way of a Paia application.
He suspended the declaration of invalidity for two years to give parliament the time to correct the relevant sections, but ruled that, in the interim, provisions to give effect to the ruling should be read into the two acts.