The decision by South Africa’s Constitutional Court to invalidate legislation that banned access to taxpayer information by anybody other than the SA Police Service (SAPS) and the National Prosecuting Authority (NPA) – in Arena Holdings (Pty) Ltd t/a Financial Mail v SARS – is not likely to result in the release of former president Jacob Zuma’s tax records or those of anyone else, for that matter, in the foreseeable future.

The judgment creates only a limited exception to the general obligation of the SA Revenue Service (SARS) to keep taxpayer information confidential. SARS can only grant such a request if the disclosure of the tax records would reveal evidence of “a substantial contravention of, or failure to comply with, the law” and “the public interest in the disclosure of the record clearly outweighs the harm”.

A decision on whether a request for taxpayer information meets this threshold must be made by the SARS Commissioner (or other designated SARS official). But as SARS has consistently shown a profound reluctance to breach taxpayer confidentiality, it may well apply this test in an overly strict manner.

Some journalists, opposition politicians and ANC members aligned with the so-called radical economic transformation (RET) faction may also argue that SARS cannot be trusted to assess such requests fairly when it involves taxpayers who serve in government.

So, for example, while there may be suspicions that President Cyril Ramaphosa’s tax records would reveal a failure to comply with the law (suspicions raised by the Phala Phala scandal), this may not, in the absence of some solid evidence, justify disclosure of the tax records. (In the Arena Holdings case, Zuma argued before the Constitutional Court that the release of his tax record could not be justified by mere allegations contained in a book, as this was all hearsay evidence.)

Read more in Daily Maverick: ‘Cloak of confidentiality’ over tax returns can be lifted when there is a ‘public interest override’, ConCourt rules

Moreover, if SARS does decide to disclose the tax records of an individual, that individual could stall or even stop the release by taking advantage of the various protections afforded by the legislation. This includes lodging an internal appeal, and if that is unsuccessful, challenging the validity of the decision in court. (Conversely, a journalist whose request for the disclosure of a taxpayer’s record is denied, could also approach the court to have that decision reviewed.)

As far as Zuma is concerned, he is likely to use all the avenues open to him to prevent the disclosure of his tax records.

Officially, Zuma has not always opposed the disclosure of his tax records (more about that later), but in papers submitted to the Constitutional Court in the Arena Holdings case, Zuma strenuously objected to the release of his tax records to AmaBhungane and other journalists.

He argued that this would violate his right to inherent dignity “because it arms journalists whose demonstrated record of writing about me has shown nothing but hostility and a desire to harm my inherent dignity”, and suggested that the records would be used to “parade him as a symbol of corruption”.

This seemingly represents a dramatic change in attitude as he had previously given the impression that he had no objection to the release of his tax records.

Maimane complaint

To understand why, it is necessary to go back to 2018, when Mmusi Maimane, the then leader of the opposition, lodged a complaint with the Public Protector, requesting her office to investigate allegations contained in the book, The President’s Keepers, that Zuma had received undisclosed payments while in office and had failed to pay tax on the money received.

Surprisingly, the now-suspended Public Protector, Busisiwe Mkhwebane, announced that she had embarked on an investigation into this complaint, and subpoenaed the Commissioner of SARS to appear before her and to produce the former president’s taxpayer information.

SARS objected to the demand and refused to comply on the ground that the disclosure was prohibited by the secrecy and confidentiality regime established by the Tax Administration Act.

Protracted litigation between SARS and the Public Protector ensued.

The Constitutional Court eventually confirmed in December 2020 that section 69(1) of the Tax Administration Act permitted SARS to withhold taxpayer information from the Public Protector.

As an aside, when Mkhwebane first issued a subpoena in 2018, Zuma confidant Tom Moyane was still the SARS Commissioner, which may provide a partial explanation for the uncharacteristic enthusiasm Mkhwebane showed for the investigation into Zuma, despite the fact that she had previously demonstrated some bias in favour of the RET faction of the ANC.

Of interest here is that section 69(6)(b) of the Tax Administration Act permits the disclosure of taxpayer information to another person “with the written consent of the taxpayer”.

On 12 November 2019, shortly before the case was heard in the high court, Zuma tweeted his consent, writing: “It must be known that I have nothing to hide. If the @PublicProtector wants to see my SARS records she is free to do so. We should not make the job of the PP difficult. If she wants my records, she must have them.”

However, as a tweet is not a legally recognised way to grant written consent, SARS disputed the claim that Zuma had consented to the disclosure of his tax records.

Zuma filed a sworn statement the night before the case was to be heard to confirm under oath that he authored a tweet “to indicate that I had no objection to the public protector gaining access to the taxpayer information which she seemingly needed to complete an investigation in the public interest”.

Stating that he had “nothing to hide”, Zuma claimed that he “also intended to give unqualified consent for the use of the relevant information by the public protector or any other organ or institution of the state, which would, in any event, be bound by its own rules regarding confidentiality”.

The wording here is curious as it does not, in fact, grant consent to the Public Protector to access Zuma’s tax records.

Instead, Zuma merely states that he intends granting such consent, presumably at some undisclosed date in the future.

It serves as a reminder to journalists to scrutinise statements made by politicians very carefully to ensure that carefully crafted but potentially misleading statements are accurately reported.

We do not know whether Zuma kept his promise to grant unqualified consent for access to his tax records. I would be surprised if he did.

In any event, as far as I can tell, the Public Protector never took Zuma up on his offer, and it is unclear whether the complaint lodged against Zuma by the then leader of the opposition was ever investigated or finalised.

We may therefore never know whether Zuma really believed back then that he had nothing to hide, or whether his more recent opposition to the disclosure of his tax records (which suggests that he does believe there is something to hide – at least from journalists), was justified.

Read more in Daily Maverick: ConCourt ends total tax secrecy – a victory for transparency and accountability

Right to privacy

All this raises questions about the wisdom of legislation that shields our elected representatives from scrutiny. Most perplexing is that our courts seem to believe that as far as taxpayer confidentiality is concerned, the right to privacy should trump other rights – except in very limited circumstances.

The danger that the court may be wrongly conflating the right to privacy with the protection of an individual’s reputation, is illustrated by a passage in the dissenting judgment in the Arena Holdings case, where Justice Mhlantla noted that the limited exception provided for in the majority judgment “could be detrimental to the reputations and societal standings of taxpayers” and even warned that it was “a drastic measure that may have grave consequences to a taxpayer”.

While the disclosure of taxpayer records does impose a limitation on the right to privacy, I am not sure this limitation is as severe as suggested by Justice Mhlantla.

Surely, it will only have grave consequences for a taxpayer if it reveals something really bad (such as the commissioning of a criminal offence) about that taxpayer.

I also worry that the law will continue to shield most public representatives (including the president, cabinet ministers and MPs) from scrutiny of their finances and tax affairs, thus limiting the ability of voters to make informed choices at the ballot box.

Surely, the moderate limitation that would be imposed by legislation that requires complete tax transparency from our elected representatives could easily be justified, not least because of the potential effect this may have on the ability of voters to hold them accountable.

But as such legislation can only be adopted if a majority of MPs in the National Assembly supports it, it is unlikely to see the light of day.

Turkeys not voting for Christmas, and all that. DM