South Africa

Op-Ed: It’s time to call off the tax revolt

By Wayne Duvenage 22 March 2018

Just as we all suffer when the taxman fails, so it is that we all benefit when he succeeds. By WAYNE DUVENAGE.

The past few years under former President Zuma’s leadership were peppered with calls for OUTA and civil society at large to drive and co-ordinate a full-blown tax revolt, in retaliation for the blatant corruption and wasteful expenditure by many government departments and State-owned Entities (SoEs).

The reckless and arrogant squandering with impunity displayed an attitude that government leadership cared less about the people or the state of the nation, and more about themselves and their connected crony network. The natural reaction to this brazen thieving and wasteful conduct was heightened frustration and anger by taxpayers across all classes, triggering retaliation and calls to stop paying taxes.

For as much as the public’s frustration was understandable and the calls for a tax revolt justified, the probability of any one or multiple organisations co-ordinating and pulling off a full-blown tax revolt was highly unlikely. Without the buy-in of big business – who transfer the bulk of PAYE, VAT and company taxes into government’s coffers – the effort would have no legs and, let’s face it, big business was never going to take such a bold and civilly courageous stance against government.

Aside from the improbability of a tax revolt being pulled off, there were the unintended consequences of the damage to society through reduced security, health and other public services that would be suffered by the poor and middle-class citizens. An indirect “shot in the foot”, so to speak.

As much as we positioned our stance at OUTA to placate the calls for a tax revolt, the public’s continued calls for this were relentless from 2015 through to recent months. We got a sense that people were taking the matter into their own hands, as we witnessed calls for tax payments to be delayed as much as possible and for all tax avoidance avenues to be exhausted. Suggestions to break the law by trading in cash, so as to keep such transactions outside the formal invoicing systems, were becoming a common reality. Government’s brazen waste and corruption was being met with heightened tax immorality.

Consequently, South African Revenue Services (SARS) began to feel the heat as tax collections declined, partially as a result of rising tax immorality and partially due to a declining economy with reduced company profits and other tax transactions. The taxman’s tit-for-tat response was to delay VAT refunds and the resultant downward spiral for SARS was well under way.

Then December 2017 happened and the off-guard Zuma camp had their power ripped out from under their feet. What happened over the next few months were a series of actions that many thought would take six months to a year or longer to happen. The Hawks and Asset Forfeiture Unit (AFU) moved with pace into Gupta-owned businesses and provincial premiers’ offices. The boards of SoEs were being overturned and sweeping changes to Cabinet leadership positions took place. The disgraced President Zuma was pushed out of office and then, this week, the head of tax collection and a kingpin in the State Capture network, Tom Moyane, was given the boot.

One needs to cast one’s mind back just four months and recount the depressed state of our national psyche to realise how immense the past three months’ activities have been.

Cyril Ramaphosa’s actions have been swift and the political momentum to tackle corruption and improve government’s delivery to the people has begun in earnest. His actions and work have impacted on the credit ratings agencies and investor community. While we still have much work to do on the corruption and maladministration front, public and business sentiment is up. And despite the continued challenges we face on our sensitive land reform issue, my gut says that sanity will prevail and lasting solutions will be found to prevent any hint of a Zimbabwe style debacle from developing.

Now is the time for the public’s involvement in helping the tax-man. As strange as that might sound, we need to do our utmost to turn things around at SARS. A new leadership is being ensconced as we speak, to deal with the unenviable task of fixing the mess of Moyane’s madness. And we as taxpayers and businesses can play our part to speed up the recovery at SARS and, consequently, that of our nation.

What a new and morally adept tax collection leadership needs is our collective support. Besides the recruitment and replacement of lost talent (purged by Moyane and Zuma’s cohorts), the efficiency in revenue collection will need to improve at SARS, and we have a role to play in returning this institution to its former glory. This means that all who justifiably partook in practices that hampered the tax collection process should do an about-turn.

Now is the time to call off the past “silent” tax revolt. By doing so, we send a positive signal to our new government leadership and the international investment community of just how a nation’s taxpayers are able to stimulate support and trust in government’s improved governance.

Just as we all suffer when the taxman fails, so it is that we all benefit when he succeeds. If we can help SARS and Treasury to correct their shortfall, I believe we stand a strong chance of receiving a reduction in VAT back to 14% next year, along with the possibility of no tax increases in 2019. The fact that it is an election year next year will no doubt help in this regard. DM

Original Photo: The suspended SARS Commissioner Tom Moyane (photo by Leila Dee Dougan)

Gallery

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