Disclosure of Public Officials Tax Returns

DISCLOSURE OF PUBLIC OFFICIALS TAX RETURNS DISCLOSURE OF PUBLIC OFFICIALS TAX RETURNS By Barrister Umar Shahid of Lincoln's Inn*, Islamabad Whether or not the tax returns of public officials should be made public information has been the subject of debate for quite some time in almost all jurisdictions of the world. At the core of the argument lies a more central debate on the balance between privacy and transparency. Much like, the privacy v transparency debate, there are valid arguments in favour of and against such a ruling. However,, before one analyses the question it is imperative to pin-point what is a 'public office' and who is a 'public official'. The Black's Law Dictionary defines a public official, as "one who holds or is invested with a public office (as defined below); a person elected or appointed to carry out some portion, of a government's sovereign powers". Moreover, a public office is defined as "a position whose occupant has legal authority to exercise government's sovereign powers for a fixed period"'. In Pakistan, the chief characteristics of a public office seem to comprise a post the occupation of which involves the discharge of duties towards the community, or some section of it; these duties are usually connected with the Government, whether central or local. (AIR 1961 Mad. 450) The characteristics of a public office and a public official are * The writer has been called to the Bar of England & Wales and is practicing as an Advocate of the High Court in Islamabad. The views expressed in this article are his own. Black's Law Dictionary 9th Edition therefore fairly similar. What differs is the balance struck between privacy of individuals holding a public office, and the right of the public to seek information regarding such individuals, as they are entrusted with tasks which directly affect the public. In the United Kingdom, the SIGMA paper2' provides that 'serious weight should be given to privacy concerns. According to the paper there is "the reluctance to require the disclosure of personal and family income and assets and the publication of such declarations. The UK has no general requirements to declare income and assets, and the reason for this is to avoid the invasion of privacy that these requirements imply" (OECD/SIGMA, 2007). The Human Rights Act, 1998 of the United Kingdom provides such protection on grounds of privacy as well, and even though the Register of Members' Financial Interests (as well as that of Interests of Members' Secretaries and Research Assistants) and the Register of Lords' Interests (as well as that of Interests of Lords Members' Staff) are available to the public, tax returns have been exempt from such requirements of disclosure. Conversely, in Denmark, there is full public disclosure of economic interests of members of parliament and ministers 3. Tax returns also form part of the information made available to the public. Such information is also publicly disclosed in countries such as Bosnia and Herzegovina for elected officials.4 Similarly, in Norway and Sweden, the tax details of all citizens are made public. This has been the position in Sweden since 1766, since the principle of transparency is fundamentally ingrained in the system of governance, and appears to cause concerns of privacy. Sweden's tax calendars are published in stages, starting with ordinary tax payers, and moving to high income earners from company bosses to celebrities. In Norway there have been recent changes allowing release of such information to the public. However, a u-turn was taken and transparency was restricted once again before finally returning to allowing the public the right to such information. General income and property level of public officials are now available and can be reviewed by the public over the Internet.5 2. Support for Improvement in Governance and Management 3. Regulations on the Voluntary Registration of the Engagements and Economic Interests of the Members of Folketing (Regler om frivillig registrering of folketingsmedlemmernes hvery og oko-nomiskeinteresser), www.ft.dk/. Folketinget/Medlemmer/findMedlem/6Hvery .aspx. 4. Declarations governed by the Election Law. 5. Tax Lists 2008 (Skattelister 2008),http://skattelister.aftenpostemno/skattelister/ start.htm. Deputies (MPs) in Italy are required to deposit a declaration regarding their financial situation and a copy of their income tax return: the two documents must subsequently be deposited each year at the conclusion of their mandate. The Department for Privileges and Immunities of the Chamber of Deputies ensures the acquisition and conservation of the documents and declarations as prescribed by law, as well as their publication in the special bulletin, which may be consulted by all citizens.6 A number of new member States in the EU, including Hungary' and Poland, require their MPs to provide full details of income to their parliamentary authorities. These are, however, not made public.7 In some countries, such information is available on demand from citizens/media. In the United States of America the public accessibility of public officials' declarations (reports) is bound with the following rules/conditions: * inspection of reports is permitted or copies furnished to any person requesting; * a reasonable fee may be required to be paid to recover the cost of reproduction or mailing; * a report may not be made available to any person except upon written application by such person, stating: * their name, occupation and address; * the name and address of any other person or organisation on whose behalf the inspection or copy is requested; and * that the person is aware of the prohibitions on the obtaining or use of the report. Any application shall be made available to the public throughout the period during which the report is made available to the public.8 Further conditions apply to the use of reports i.e. they shall not be used for any unlawful purpose; for any commercial purpose, other 6. Information correct as at 2008, from the European Centre for Parliamentary Research. 7. Parliamentary Ethics: A question of trust 2011 European Parliament Office for the Promotion of parliamentary democracy http://www.europarl.europa.eu/ pdf/oppd/Page 8/codes of conduct FINAL-ENforweb.pdf 8. The Ethics in Government Act, Section 105(b). than by news and communications media for dissemination to the general public; for determining or establishing the credit rating of any individual; or for use, directly or indirectly, in the solicitation of money for any political, charitable, or other purpose.9 However, the United States has limited public disclosure by defining certain categories of public officials whose information shall not be available to the public.10' For public officials of the United Nations, declarations have become a part of the global standard that is embodied in the United Nations Convention against Corruption (adopted in 2003) (the "Convention"). Article 8 (Paragraph 5) contains a soft standard, which requires State parties to "endeavour, where appropriate and in accordance with the fundamental principles of its domestic law, to establish measures and systems requiring public officials to make declarations to appropriate authorities regarding, inter alia, their outside activities, employment, investments, assets and substantial gifts or benefits from which a conflict of interest may result with respect to their functions as public officials". The Convention returns to the issue of disclosure in the context of asset recovery by requiring that "each State Party shall consider establishing, in accordance with its domestic law, effective financial disclosure systems for appropriate public officials and shall provide for appropriate sanctions for non-compliance. Each State Party shall also consider taking such measures as may be necessary to permit its competent authorities to share that information with the competent authorities in other States Parties when necessary to investigate, claim and recover proceeds of offences established in accordance with this Convention" (Article 52, Paragraph 5). The requirements of the Convention do not amount to more than the obligation to consider, still, borrowing language from the Legislative Guide for the Implementation of the UN Convention Against Corruption (UN, 2006, Paragraph 12, p. 4), it is clear that States are urged to consider adopting such declaration systems and to make a genuine effort to determine whether they would be compatible with their legal system." The Courts in India have used the constitutional right to freedom of expression - including the right to receive information - to place candidates for election under strict "disclosure" requirements - covering 9. The Ethics in Government Act, Section 105(c). 10. The Ethics in Government Act, Section 105(a). 11. http://www.oecd.org/dataoccc1/40/6/47489446.pdf. their own assets and liabilities and those of their families.12 Justice Krishna Iyer in Maneka Gandhi v. Union of India said "a government which functions in secrecy not only acts against democratic decency, but also buries itself with its own burial".13 In its judgment in the case of Union of India v. Association for Democratic Reforms14 the Supreme Court of India relied on the citizens' right to know derived from the concept of 'freedom of speech and expression'. After considering case-law on the right to freedom of expression under Article 19 of the Indian Constitution, the Court concluded:- "In our view, democracy cannot survive without free and fair election without free and fairly informed voters. Votes cast by uninformed voters in favour of X or Y candidate would be meaningless ... one-sided information, disinformation, misinformation and non-information all equally create an uninformed citizenry which makes democracy a farce. Therefore casting of a vote by misinformed and non- informed voter or a voter having one-sided information only is bound to affect the democracy seriously. Freedom of speech and expression includes right to impart and receive information which includes freedom to hold opinions ... there is no reason to hold that freedom of speech and expression would not cover right to get material information with regard to a candidate who is contesting election for a post which is of utmost importance in the democracy". The Court's conclusions included the following:-- "To maintain the purity of elections and in particular to bring transparency in the process of election, the Commission can ask the candidates about the expenditure incurred by the political parties and this transparency in process of election would include transparency of a candidate who seeks. election or re-election. In a democracy, the electoral process has a strategic role. The little man of this country would have basic elementary right to know full particulars of a candidate who is to represent him in Parliament where laws to bind his liberty and property may be enacted". 12. Disclosure of politicians' tax returns and freedom of expression: drawing on the Indian experience Hugh Tomlinson QC April 2012 http://inforrm. Word press .com/2012/04/11/disclosure-of-politicians-tax-returns-ancl-freedom-of-expression-rawing-on-the:indian-experience-hugh-tomlinson-qc/ 13. 1978 AIR (sic) 597 14. 2 May, 2002, Civil Appeal No.7178 of 2001 This argument about the need of transparency which can be brought by public disclosure can apply not only to elections and MP's, but to all other public officials. Rakesh Gupta's easel' has made the position quite clear that income tax returns are open to public scrutiny as tax returns cannot be considered to be exempt under S.8(1) Right to Information Act, 2005. However there are controversial issues attached with the ruling: Presently, the right to privacy is considered to flow from Art.21 of the Constitution (right to life), and does not explicitly permit any restrictions in the public interest, especially since the Act allows public interest to allow unwarranted invasions, the provision seems even more constitutionally suspect. In Pakistan, the Freedom of Information Ordinance, 2002 requires public bodies to disclose certain information to the public, however, tax returns of public officials do not form part of the information that may be made public. Section 7 of the Freedom of Information Ordinance, 2002 provides:-- Subject to the provisions of section 8, the following record of all public bodies are hereby declared to be the public record, namely: - (a) Policies and guidelines; (b) transactions involving acquisition and disposal of property and expenditure undertaken by a public body in the performance of its duties;. (c) Information regarding grant of licences, allotments and other benefits and privileges and contracts and agreements made by public body; (d) Final orders and decisions, including decisions relation to members of public; and (e) Any other record, which may be notified by the Federal Government as public record for the purposes of this Ordinance. Section 8 however makes certain information confidential, especially records relating to personal privacy of an individual, which includes tax returns. Section 8 provides: 15. Rakesh Kumar Gupta v. Public Information Officers -- Central Information . Commission decision No: CIC/LS/A/2009/000647/SG/5887 (Appeal No. CIC/ LS/A/20097000647). Exclusion of certain record.---Nothing contained in section 7- shall apply to the following record of all public bodies, namely:-- (a) Noting on the files; (b) Minutes of meetings; (c) Any intermediary opinion or recommendation; (d) Record of the banking companies and financial institutions relating to the accounts of their customers; (e) Record relating to defence forces, defence installations or connected therewith or ancillary to defence and national security; (f) Record declared as classified by the Federal Government; (g) Record relating to the personal privacy of any individual; (h) Record of private documents furnished to a public body either on an express cir implied condition that information contained in any such documents shall not be disclosed to a third person; and (i) Any other record which the Federal Government may, in public interest exclude from the purview of this Ordinance. Therefore, records relating to personal privacy of any individual, public official or otherwise, is confidential information as per the 2002 Ordinance. Article 19A of the Constitution of the Islamic Republic of Pakistan also grants freedom of right to information. As per Article 19A, every citizen shall have right to information in all matters of public importance subject to regulation and reasonable restriction imposed by law. Following the stance taken by countries like Norway and the United States and the approach being adopted in India, Pakistan, keeping in view its history of corruption in public offices, should look more favourably towards transparency and make the tax returns of public officials public information rather than providing them protection on the grounds of privacy of personal information, as is the c4se with the United Kingdom. It is important for the public-go know from what sources appointed and -elected public officials are earning their income from. In the case of appointed officials, this will help to scrutinize the sources of income taken over and above the sanctioned salaries, and in the case of elected officials, this will help disclose their interests. Unfortunately, no significant case-law regarding the subject matter has arisen up till now in Pakistan and the question still remains open for debate and review.