Deccan
Chronicle: Mumbai: Friday, 26 June 2015.
Transparency
should be a cardinal feature of a tax administration functioning under a
democratic set-up. Without transparency, democracy would not survive. And
transparency would be conspicuous by its absence in any other form of political
structure.
Therefore,
the income-tax (I-T) department, which is vested with the arduous task of
taxing the people, has an added responsibility to be transparent, merely
because of the uniqueness of its mission i.e. to take away from the populace a
significant part of their earnings. Apparently, the task is sensitive and
delicate, and, therefore, needs to be carried out with utmost care. However, if
the taxpayer is allowed the freedom to know how the money was taken and the
purpose for which the money is used and its journey back to society that the
taxpayer is part of, it is a way of comforting those who are uncomfortable
parting with their income.
There is a
need to reassure the taxpayer that his money is well spent. All this can be
done only if taxation is administered in a transparent way. The refusal last
week by a high court to give out the details of income-tax returns of Ajit
Pawar is a case in point. A crusader activist, Shailesh Gandhi, had asked for
the details of former Maharashtra deputy chief minister Ajit Pawar’s income-tax
return. The high court refused.
The refusal
was on the ground that the petitioner could not prove that the petition was in
public interest. “I had felt that the Girish Ramchandra Deshpande judgment by
the Supreme Court had constricted RTI by expanding the scope of Section 8(1)
(J) far beyond law and, hence, tried to get the I-T returns of Ajit Pawar
through RTI,” Shailesh Gandhi told media.
The following
is the gist of the Supreme Court order in the case of Girish Ramchandra
Deshpande.
In the order
delivered on October 3, 2012, Justice KS Radhakrishnan and Justice Dipak Misra
held that the details disclosed by a person in his income-tax returns are
‘personal information’ which stand exempted from disclosure under Clause (J) of
Section 8(1) of the RTI Act, unless it involves a larger public interest.
The apex
court further said the petitioner in the instant case has not made a bona fide
public interest in seeking information and the disclosure of such information
would cause unwarranted invasion of privacy of the individual under Section
8(1) (J) of the RTI Act.
In short, the
apex court denied the information in the Girish Ramchandra Deshpande case on
the ground that what was sought was personal information and unless larger
public interest was involved, such information cannot be given out. The high
court cited the apex court order to deny Shailesh Gandhi the information he had
sought. How would such a retrogressive approach on dissemination of information
help reinforce people’s faith in democracy? The income-tax department collects
only financial transaction details and related information. How can they be
construed as personal information?
If a member
of the public cannot access the information collected by the I-T department,
the department has no right to boast of being an arm of a democratic
government. What the crusader petitioner wanted was to match the details given
by Pawar before the election officials and the details given in Pawar’s
income-tax return. A legitimate demand by any reckoning. The Girish Ramchandra
Deshpande order by the division bench of the Supreme Court appears to be based
on rock-solid logic. The order has all the trappings of having solved the
conflict between right to privacy and public interest. Prima facie there is a
problem here. Rock solid logics are sometimes devoid of common sense.
If India
cannot be transparent in its own house, like the income-tax department’s
functioning, India loses its moral right to challenge the opaqueness and
defiance of the over 70 tax havens in the world that thrive upon their banking
secrecy laws. These tax havens can also have their ‘rationale’ in place,
purportedly for protecting the interests of their clients, whoever they are.
They can also
rationalise their refusal to give out such details claiming such acts would not
serve the interest of their own public. Most of these destinations thrive on
their banking and finance industries, which are founded on their banking
secrecy laws.
Any dilution
of such laws will be against the interest of their economy and their people.
India’s own record of inadequate transparency can undermine its own image
abroad, which can potentially harm its current task of persuading the tax
havens to dilute their banking secrecy laws and give out information.
Therefore, the government’s penchant for blocking access to the public the
information available with the government agencies is not in tune with the
demands of time.
It is
understandable if any government agency declines to give out information about
an ongoing investigation as it may harm the process. These are exemptions
necessary in any establishment. However, what is the justification for clamping
down a general ban on accessing the information collected and preserved by the
income-tax department?
Indian
companies pay advance tax every three months. June 15, September 15, December
15 and March 15are the dates by which they have to pay advance tax. Details
regarding the tax outgo of the companies are considered sacrosanct and there is
a directive from the authorities not to divulge these details to the public.
Though a section of the media manage to get those details published, such
details have again become highly confidential under the new dispensation at the
centre. The reason the Central Board of Direct Taxes goes to this extent to
keep such information highly secret is that there were objections from the
companies in the past when the details of their tax outgo were made public by
the media. Such things have ramifications on business, the companies claim.
But the
question that has not been asked is this: doesn’t such information help the
public make an informed decision on their commercial dealings, including
investments? And how does one resolve the contradiction of claiming to be the
largest democracy in the world, and running non-transparent government
departments? What is the logic of continuing with non-transparent machinery
when the rest of the world is waking up to the need for transparency?
When US
president Lyndon Johnson signed the Freedom of Information Act in 1966, he
said: “This legislation springs from one of our most essential principles: a
democracy works best when the people have all the information that the security
of the nation permits. No one should be able to pull the curtains of secrecy
around decisions which can be revealed without injury to the public interest.”
Transparency
requires that decisions and actions of those in the government are open to
public scrutiny and that the public has a right to access such information.
This concept is central to the very idea of democratic governance. Shailesh
Gandhi said he is going to move the Supreme Court against the high court order.
It would be interesting to see at this level the clash of the conflicting
perspectives and convictions on an issue, the dimensions of which are many and
varied.
Unravelling
the relationship between taxation and democracy, a paper presented by the
department of political science, McGrill University, came to the conclusion
that there is a relationship between payment of tax and the demand for
democracy as they found in Uganda. The more tax they pay, the more democracy
they seek, the paper concluded. While the elite seeks for political democracy,
the common public asks for that part of democracy, which provides them
services.
“Two distinct
mechanisms, demand for democracy and demand for services, link tax to democracy
in Uganda. Each type of demand affects certain aspects of democracy more
strongly than others,” the paper concluded.
(The
author is a Mumbai-based journalist who writes on personal finance and tax
issues)
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