The tax records kept by the
Inland Revenue Department (IRD) contain an array of
biographical and financial details about us which are
private and personal. Section 4 of the Inland Revenue
Ordinance (IRO) provides protection of their confidentiality
in the normal circumstance.
The IRD also possess wide powers to obtain information
to an almost unlimited extent. These powers are enforceable
by even greater power of imposing fines, search and
seizure. The Legislative Council has granted these extensive
powers to the IRD for the "sole' purpose of collecting
tax revenue. However, the bountiful information kept
by the IRD has recently caught the prying eyes of other
law enforcement agencies such as the police and the
ICAC.
Naturally, the police and the ICAC have their own
powers to obtain information, to order search and to
seize records. These powers are tailored to the specific
needs of crime and corruption fighting. But the use
of these prescribed powers are actually more restrictive
than those currently enjoyed by the IRD. Getting access
to tax records by legislating through the "backdoor"
therefore offers a tempting option. By a simple stroke
of pen in the name of crime fighting, the police has
already gained access under new legislations passed
in the past two years to all our tax records which are
neither intended for their eyes nor obtained for the
purpose of fighting crime in the first place.
The powers of the police to temper with the integrity
of tax records now exist under section 20 of the Drug
Trafficking (Recovery of Proceeds) Ordinance (DTO) and
section 3-5 of the Organised and Serious Crime Ordinance
(OSCO). The ICAC is in the legislative process of asking
for similar powers under the Prevention of Bribery (Miscellaneous
Provisions) (No. 2) Bill 1995 (PBO). The most recent
Inland Revenue (Amendment) (No. 3) Bill 1995, which
involved exchanging of information under bilateral double
taxation relief arrangements with other jurisdiction,
can also have the potential effect of cracking section
4 of the IRO wide open. These new legislations taken
together pose a serious threat to the confidentiality
of our tax records.
I am sure that we all wish to help in fighting crime
and corruption. But a balance must be struck between
our right to privacy, proper legislative intent and
the granting of adequate powers to law enforcement agencies
to do a proper job. There is a point where enough is
enough.
The most obvious danger of these "backdoor" legislation
is that the police or ICAC can go on a "fishing expedition"
anytime by combing through our tax files to look for
clues (rather than seeking collaborative evidence) of
crime. The less obvious danger is that our personal
details, sensitive commercial information and confidential
contracts and agreements etc. may be paraded in an open
court as evidence. At present, all these can happen
behind our back and without our explicit knowledge or
consent.
Eric has raised these grave concerns with the administration
under the PBO Bill Committee. The administration has
willingly acknowledged my concerns and we now working
on some effective safeguards:-
1. In addition to giving me firm assurance
on record that the administration will only make an
application to access tax records most sparingly, say
few times in a year; the ICAC will further develop internal
guidelines to strictly require the personal authorization
of the Commissioner or the Deputy Commissioner in order
to make such an application. Eric will also monitor
the frequency of requests for access to tax records
on a periodical basis by asking questions in LegCo.
2. At present, an exparte application must
be made to the court on a general ground of public interest
for access to tax records. Eric has asked the Attorney
General's Chamber (AGC) to expressly state in the law
all the legitimate grounds of public interest including
the balanced view of preserving taxpayers' needs for
confidentiality. The AGC has also been asked by Eric
to work out a procedure to notify the affected taxpayers
in the event that his/her tax records may be used in
an open court. The taxpayer must be granted the right
to object and to argue his/her case in court before
his/her records can be used as evidence publicly.
3. Eric strongly urged the administration to
restrain itself in introducing similar new legislation
to LegCo in future. Hong Kong cannot afford to have
any further erosion of tax confidentiality which will
undermine investors' confidence and our right to privacy.
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