But the judgment doesn’t mean that tax information of average taxpayers will become available to whoever asks for it, as the ruling only applies to those “in whose affairs the public have a legitimate interest”.
On Tuesday, the Gauteng North High Court in Pretoria ruled that the tax agency must supply investigative journalism outfit amaBhungane and business magazine the Financial Mail with Zuma’s tax records for the years between 2010 and 2018 within 10 days of the ruling.
The two publications had launched a joint court bid to access his tax files in November 2019, following the publication of The President’s Keepers, a 2017 book by investigative journalist Jacques Pauw.
Judge Norman Davis ruled that sections of the Tax Administration Act and the Promotion of Access to Information Act, which SARS earlier relied on to deny a request by the Financial Mail to access Zuma records, were unconstitutional.
In the public interest
“The judge in this case was very careful to make clear that the onus would be on a requestor to justify why the secrecy rules should not apply, i.e., how it would satisfy the public interest requirement,” said Tickle.
“It will not be easy to remove SARS’s secrecy barrier, but it will certainly be easier than it was before this judgment.”
While the ruling opens a new avenue to obtain tax records in the public interest, it is still a far cry from the sweeping reform that some tax transparency campaigners want to see.
And while the revenue collection agency hasn’t commented on the judgment yet, analysts think it highly likely it will appeal the ruling, given the weight it has historically placed on protecting taxpayer confidentiality.
If the ruling is upheld, Tickle notes that SA would still be far removed from countries such as Norway, Finland, or Sweden, which have published taxpayer data as a matter of course for many years.
“Nevertheless, as we are edging into an era of greater transparency – some countries are, for example, advocating public beneficial ownership registers; one does wonder whether this judgment could be the first step towards more disclosure overall.”
SARS Commissioner Edward Kieswetter has long argued that absolute confidentiality is a vital policy instrument to boost taxpayer morality, a term used to describe the willingness of people to comply with the letter and spirit of tax laws.
In 2020, in the wake of a Constitutional Court ruling blocking Public Protector Busisiwe Mkhwebane’s bid to access Zuma’s tax record via subpoena, Kieswetter described confidentially as a “sacrosanct pillar” for the agency.
“Every taxpayer must have the confidence that SARS will fight to protect this right without fear, favour or prejudice,” he said.
Tickle notes that in approving the release of Zuma’s tax data, Norman overrode this long-established policy. In his ruling, he argued that the risk of penalties and prosecution were more compelling reasons for tax compliance than a “secrecy compact” between taxpayers and the state.
Expect more bids for tax data
Tickle said the ruling also made it more likely that the tax records of other prominent people could be accessed.
“Although the case deals only with [former] president Zuma’s tax returns, the reasons for the request for which being very specific; this judgment means it is entirely possible that, in future, other tax returns to be requested (albeit that the requestor will have to satisfy the criteria set down).”
“Will there now be a flurry of requests for tax returns of other public figures?” she asked.
Jean du Toit of Tax Consulting South Africa said if the two publications do access Zuma’s records, they will finally be in a position to answer the question of whether the former president was tax-compliant.
“This brings us to the wider implications of the judgment – if it becomes clear that there are discrepancies in Mr Zuma’s records, the question will be asked why SARS, ostensibly, did nothing about it,” he said.
“What it also means is that where there is a public figure or government official who is seemingly non-compliant for tax purposes, then the public interest provision can be invoked and SARS can be compelled to publicise the relevant tax records.”
Du Toit said that in recent years various presidentially appointed commissions of inquiry had heard evidence of “clear cases” of non-compliance of high-profile individuals in the public domain. But a blanket prohibition against SARS sharing information about taxpayers, except in very limited circumstances, meant the agency could not provide information about these cases, even if the people involved were being investigated for their purported delinquency.
“Now, as the judgment stands, these questions can be asked and SARS may be compelled to give us answers, as it is potentially in the public interest,” he said.
Du Toit said Tax Consulting SA had long advocated for such a mechanism to be implemented, in the belief that it would boost rather than decrease taxpayer morality.
“Where it appears that certain taxpayers are not investigated or prosecuted for what seems to be clear non-compliance, it erodes taxpayer morality. SARS is then perceived to be prosecuting selectively or not at all.”