Last week, the who's who of the business sector made it to the front page of almost every daily in the country. But for the wrong reasons. The businesses were in a list of more than 500 companies involved in VAT evasion scam, released by the Ministry of Finance following a directive from the Rastriya Suchana Ayog.
Neither the business houses nor tax collectors have a very good track record in Nepal. So when people turned on their tv sets on that evening, their assumption that all businessmen are crooks was confirmed.
Stories about VAT evasion were first broken a few months ago. The Finance Ministry refused to provide details of the investigation but lists circulated through blog sites. The companies involved have officially been made public now, thanks to an application by Tara Nath Dahal of Freedom Forum that fights for right to information.
While this decision was a test case for right to information, the companies whose names were disclosed lost their right to confidentiality and were immediately presumed guilty in a collective trial by media. When the companies were made public, the status of individual cases were not considered. Some of the cases are still under investigation, some are fighting their cases at the Revenue Tribunal, and others are just under suspicion.
In many of the 385 firms listed for faking VAT bills, the users of those companies have been held responsible. However, the names were reported in the media like all of the companies were already guilty of the charge. The list included leading companies of the country, also the biggest employers and tax payers.
It could be many of them are indeed guilty, but we don't know until they are proven to have committed a crime in a court of law. That is what the rule of law means. A breakdown of the judicial system means that anyone can be framed by a business rival, and the person is jailed until innocence is proven. Prime Minsiter Baburam Bhattarai signed the BIPPA agreement with India, but potential investors in Nepal are also looking at our legal practices, and what they see doesn't inspire much confidence.
Whether they are taxpayers or tax evaders is not for the public or the media to decide. Unless these companies had a legal stamp on them for their irregularities, their names should have been kept confidential.
Flashing the names will only make the investigation more difficult now. Companies that were cooperating during the investigation in order to save their face, now have less to lose. The investigating officers may have a difficult time gaining their trust. The anonymity of cyberspace provides the cloak for anyone to make any accusation against anyone, there is no legal recourse. Tarring all businesses (the honest ones as well as the crooks) with the same brush and presuming they are guilty until proven innocent goes against law, it is not justice.
Since fake VAT bills leave a paper trail, it should not be difficult to separate the wheat from the chaff. There are institutions charged with conducting such investigations, the business have the recourse to appeal. That is how the law works. The way it is going, small firms willing to mend their ways might have a difficult time even coming up with the penalty.
Tax investigation is nothing new, it is common all over the world. But nowhere in the world are "suspects" labeled "guilty". Such early disclosure is likely to discourage new investment and will negatively impact on businesses that have built their reputation on integrity.
The investigation will take its course and hopefully identify the real counterfeiters and evaders. It is then that we should use our right to information and ensure that the guilty are punished with the full force of the law. But right now, I'd rather demand a mechanism to check if the VAT bill I have in my hand is authentic.
The right to know, RUBEENA MAHATO
Transparency is the biggest safeguard of democracy