Illustrative image | Sources: The great wealth tax debate.
(Photo: iStock) | A SARS branch. (Photo: Gallo Images / ER Lombard) Just as the fuel levy is suddenly about to become an important issue, so it seems that our entire tax system might be about to change in a really unexpected way.
It may seem odd to say, but one of the real strengths of our politics is that it has found a way to legitimise a very high tax rate for people who earn above about R1.9-million a year.
You hardly ever hear people complain about it, despite the fact that they end up paying about 45% of their income to the government (and probably get very little in return).
I’ve always worried that one day this whole thing could fall apart. If people refuse to pay, or if taxation becomes hopelessly politicised, we’re lost.
I’m now more worried than ever before that we’re heading that way.
A few weeks ago the EFF won an important court case that said the finance minister can no longer just change the VAT rate on his own. Instead, it has to go through Parliament.
This makes perfect sense constitutionally. Taxation is a huge issue, and it makes sense to me that this should be dealt with politically (supporters of the previous system could argue the minister was an MP and thus had been elected, but not every finance minister has been an MP in the past).
The risk, of course, is that political parties will campaign on lowering VAT. It might seem odd, but why not?
You can easily imagine the DA or even those slightly odd people who claim that Cape Town would be better off without the rest of us, arguing that tax money is wasted and if VAT were lowered it would boost the economy.
We could probably live with that, as messy as it might be.
But it turns out, as Business Day reported this morning, it would not end there.
It would follow that, just as the finance minister cannot just change VAT, so they cannot just change the fuel levy either.
And while we can all grumble and moan and generally be annoyed that it is increased so often, the fact is that it’s almost impossible to avoid. That’s why finance ministers like the fuel levy – it’s so easy to implement.
It has a very low level of friction, because the mechanism to claw back the money has been so well established. And the cost of collection does not increase when the levy increases.
Unfortunately, it’s not just the fuel levy. It would merely be the first step.
Because, if the finance minister doesn’t have the power to change VAT, he (we’ve yet to have a woman finance minister and last had a woman deputy finance minister more than 20 years ago) also doesn’t have the power to change excise taxes on alcohol and tobacco.
So the scope for every single tax to become politicised suddenly explodes.
It means a political party could campaign on lowering the price of beer.
And if you think the phrase “Beer and Circuses” is not a winning slogan, then you know very little about democracy!
It may seem strange to say, but I can absolutely imagine a coalition being made or broken on this issue.
We’re about to enter an era in which so few people vote that small, motivated interest groups will be able to really influence elections.
And I don’t know if you know this about beer drinkers, but there are quite a lot of us.
In Sweden once, about 20 years ago, a group of people who simply wanted the right to download movies and content with no copyright restrictions formed The Pirate Party (after a website that provided these movies illegally, called Pirate Bay).
At one point they became the third-biggest party in that country by membership.
It might seem odd now, but for me it’s easy to imagine a large group of voters thinking all politicians suck, we don’t like them or their politics, but this one party is campaigning on something I agree with, so let’s go with them.
Suddenly the leader of that party could have some power, particularly with so many weak coalitions. You can imagine how, suddenly, the excise tax on beer matters.
And if you think that’s a bad outcome, just wait until the tobacco industry realises what it can do with excise taxes on tobacco (and no, I haven’t forgotten, the EFF’s first election deposit was paid by cigarette smuggler Adriano Mazzotti).
I know that having decisions made by Parliament is supposed to improve decisions. It means that you and I have to be heard. It is, obviously, democratic.
But if our politics is broken, then our taxation will be broken.
And that, in a country like ours, is a terrible, terrible outcome. DM