The information held by Argentina state agencies does not belong to them but to the public. This is the criterion adopted by the Supreme Court of Justice of the Nation in 2012, when it invoked the Inter-American Court of Human Rights and recognised the right of access to information as a human right, one that requires available information in order to be exercised.
There is a provision that prevents access to certain information: the economic and financial information of companies and individuals, which is shared only with the Tax Administration for the sole purpose of controlling the exact payment of taxes in fulfilment of a constitutional duty. It is the same rule that allows information to remain hidden from other state agencies, which facilitates the opacity of illicit economic operations and often delays the timely discovery of evasion operations and of others inherent to the increasingly complex structures of economic criminality that are growing like poisonous mushrooms all over the world.
This provision is tax confidentiality, an offshoot of bank secrecy.
Both emerged at the time of the First and Second World Wars with the migration of capital and assets within Europe. Switzerland was the first to promise secrecy (1934) and safety from possible confiscation, but also from the higher income tax rates that some of its neighbouring countries were beginning to levy in order to help their recovery in the post-war period.
Bank secrecy and tax confidentiality are legal institutions embodied in laws originated in previous social, political and economic circumstances. Tax confidentiality is conceived as a right of taxpayers, of those who pay taxes, but also of those who do not pay them.
Tax confidentiality in Argentina dates back to 1933, but the prison term for those responsible for infringement goes back to 1946. Today, 76 years later, it is still a criminal offence.
The income tax law was reformed in the same year to prevent taxpayers from deducting losses arising from illegal operations, e.g., ransom payments in a kidnapping or the payment of a bribe. They are not deductible expenses but costs, and if they are profits generated in unlawful activities they are taxed like any other profit, even if elementary human rights are violated in order to obtain them, such as in the trafficking and sexual exploitation of women. The tax does not differentiate when the profit is created by the woman's body but against her will, or in a forced manner. Pecunia non olet, as Vespasian (69-79 AD) would still say today.
In justifying this tax collection measure, the then Minister of Economy explained: "It is perfectly logical for the law on income to tax profits from illicit operations, since taxation takes into account nothing more than the income, regardless of the licit or illicit way in which it was obtained", and added "... a criterion coordinated with the confidentiality of information provided for in Procedural Law No. 11.683, (new text) ..."
Thus, tax confidentiality maintains information on licit profits hidden, but also that on illicit ones with a direct impact on tax evasion.
In several papers, Professors Issa Luna Pla and Gabriela Rios Granados of the National Autonomous University of Mexico hold that tax confidentiality is an impediment to the effective exercise of the right of access to public information, which, by definition, requires transparency in order to be exercised. Moreover, they maintain that tax confidentiality is incompatible with this right at present.
Information is thus the social input par excellence to achieve accountability, a concept taken from many works by Professor Guillermo O'Donnell, to which he attributed a crucial role in the objective of attaining strong or quality democracies in Latin America
The question is whether the democratisation of tax confidentiality could actually be a tool to help reduce tax evasion, a goal pursued by all governments as a way to improve public services to citizens and to include all people in the enjoyment of essential human rights in societies with structural inequalities.
Less secret tax confidentiality is definitely necessary to have lower rates of tax evasion and economic crime in general, and thus a fairer society with better democratic quality, in particular given new systemic risks such as pandemics and wars.
Or, in the words of Carlos Nino, a society with a transparent tax system that prevents the most ruthless from winning, which is necessary in all the countries of the world, but essential in Latin America, plagued by inequality, poverty and the most wide-ranging disparities.
Agustina O'Donnell holds a PhD in Law (UBA) and is a judge of the National Tax Court. Professor of Tax Law (UBA and UCES). Paper extracted from the recently published book Acceso a la Información Pública y Secreto Fiscal. ¿Es posible un Secreto Fiscal más democrático?, EDIAR, 2022.