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From the Inside: It is perfectly legal to join the #TaxRevolt

Helen Zille is Premier of the Western Cape. See her Wikipedia profile.

Before the end of the 2018/19 tax year (28 February), anyone who invests the equivalent of their annual salary in an approved fund to support start-ups will get all their tax refunded. This means you can invest in what South Africa needs most — growth and jobs — while ensuring that none of your hard-earned money goes to fund criminals.

In 2014, many years before State Capture became a household term, I published a column analysing this concept, using the South African Revenue Service (SARS) as a case study.

My analysis ran counter to the prevailing narrative of the time, which was shaped by weekly “leaks” channelled through the Sunday Times, purporting to expose criminal activities in the senior echelons of SARS. These stories, it turned out, were “planted” by the Zuma faction of the ANC in order to oust leading corruption-busters in SARS and shield Zuma’s network of tax evaders from scrutiny.

Going on gut instinct, I postulated that the media leaks were part of a diversion strategy by the ANC elite to neutralise SARS without creating the kind of public outcry that accompanied the disbanding of the Scorpions.

But, I argued at the time, the assault on SARS was a barrier South Africans would not let Zuma cross.

President Zuma and the ANC had better wake up right now to one unavoidable reality… South Africa has an Achilles heel. It is the 6-million law-abiding, honest personal taxpayers who contribute billions to the state’s coffers in order to ensure that the poor get the services they otherwise would be unable to afford, including 16-million monthly social grants. Most taxpayers pay willingly, and timeously, because they know it is the “right thing to do”. They want the poor to have decent opportunities to improve their lives.

But the ANC must know one thing: Law-abiding taxpayers will not tolerate a president who is a tax evader. And they will not meekly accept the fact that the ANC, through its political contacts, is able to avoid paying its dues, such as R41-million customs duty on its massive consignment of Chinese T-shirts (imported for the election, unsurprisingly, through a Zuma business contact, Mr Jen Huang).”

This analysis, almost five years ago, hit the nail on the head except for one crucial point: It massively under-estimated the scale of the corruption that a criminal syndicate of leading ANC politicians was trying to hide through targeting SARS.

R41-million for T-shirts would turn out to be a small change in the bigger scheme of things. Behind the façade of an elected government, the party was abusing the institutions of state to cover-up industrial-scale crime and looting.

During the past year, the extent and reach of the ANC’s criminality have been gradually exposed (and I suspect we have still only seen the tip of the iceberg). The Zuma years are estimated to have cost the South African economy R1-trillion in tax revenue and 2.5-million jobs, that would have been created had we merely kept pace with other emerging markets and sub-Saharan African economies over the past decade.

We have an inkling of the scale of the larceny through successive scandals, such as the aptly named Trillian deal with Eskom (facilitated by McKinsey & Company); the deep-seated rot in state-owned enterprises captured by the Gupta empire; VBS bank that channelled hundreds of millions from bankrupt municipalities to the politically connected; shady “investments” by the Public Investment Corporation to further advance their interests and many more.

For many, including myself, Angelo Agrizzi’s testimony before the Zondo commission was the last straw. Corrupt, vile racist that he is, he nevertheless did South Africa a favour by revealing how the ANC’s kick-back system by-passes government procurement processes and that the corruption network extends far wider than the Saxonwold Shebeen, watering hole of the Zupta clique.

There is now no doubt: SA doesn’t have a Zupta problem, we have a deep-seated corruption problem, currently most clearly manifested through the governing ANC.

What’s more, many of the worst miscreants will be re-elected to the feeding trough in May, by the very people doomed to permanent poverty and unemployment by those they faithfully vote for, election after election.

And waiting in the wings for his turn to lead and loot, is Deputy President David Mabuza, who has real-life skeletons in his closet — the assassinated Mpumalanga corruption-busters, eliminated before they could sing like Agrizzi.

Predictably, when the coming election ushers in another ANC government, and the Independent Electoral Commission declares it “free and fair”, South Africans will pat themselves on the back, mistakenly believing we have met the threshold of successful democracies.

Not so. The essence of a democracy is accountability — which encompasses a variety of methods to enforce adherence to the social contract that lies at the heart of every nation-state. In countries like South Africa, where the vote is still largely determined by “racial identity” rather than the quality of governance, elections (on their own) fall far short of enforcing accountability.

Fortunately, the writers of our Constitution never intended elections to be the sole accountability mechanism. With great foresight, they created several state institutions as further checks and balances on power.

What they did not foresee, however, was that almost all of these mechanisms would be decimated by a corrupt president implementing the ANC’s cadre deployment policy (behind the fig-leaf of affirmative action). Using this justification, Jacob Zuma deployed his comrades into key positions and turned state institutions into an extension of his corruption network, without having to change a word of the Constitution. Five years ago, I labelled this “State Capture”.

The appointment of Thuli Madonsela provided a brief respite. Today many citizens are investing huge hope in Shamila Batohi, recently appointed National Director of Public Prosecutions.

Commentators also laud the Zondo commission (under Deputy Chief Justice Raymond Zondo) for creating a public platform to help expose the extent of corruption. The media hype and mass catharsis surrounding the commission’s hearings have led many to conclude that, at last, the government is “doing something” about corruption.

Commissions, however, are no substitute for an effective criminal justice pipeline, with a competent police investigation, professional prosecution and punishment that fits the crime.

While the Zondo commission has revealed a lot about how the ANC evades anti-corruption systems, it will prove to have been little more than an expensive diversion if the perpetrators do not end up in jail.

Warning lights are already flashing. The Zondo probe has been cited as a reason for provisionally dropping criminal charges against Duduzane Zuma.

There can be no doubt: The ANC government has violated the social contract between the government and the governed that underpins every functional nation-state.

The state’s primary role is to protect its citizens. In return, citizens agree to sacrifice some of their freedom, giving the state a monopoly on the use of force to ensure public order, and contributing a portion of their income to enable the state to perform its functions. We pay our dues in the form of taxes, intended to advance the common good, to protect the rights of individuals and extend real opportunities to the poor.

All parties to the social contract must be held accountable for fulfilling their responsibilities.

If citizens evade tax, they face criminal prosecution (unless they are lucky enough to belong to the ANC’s protected criminal syndicate).

So, what can ordinary citizens do when the state becomes deeply corrupt and violates its role and its own rules? Elections haven’t worked and the alternative accountability mechanisms of the state have largely been captured by criminals.

One of the most common responses, worldwide, in comparable situations has been a tax revolt — often undertaken in far less compelling circumstances than our own.

I have started ploughing through case studies of 81 different tax revolts held in different parts of the world during the past 20 years (many in democracies). They all began for different reasons and have had differing results.

So why was there (another) national melt-down when I suggested the possibility of a tax revolt, if the revelations of the Zondo commission do not lead to prosecutions and convictions of the corrupt?

Sparked by Twitter, and predictably picked up by the print media, the distortions of what I actually said continue to multiply and mutate daily. Tim Cohen, former Business Day editor and columnist, correctly observed that “virtue signallers” love distorting what I say, so that they can respond in outrage, making themselves appear all the more virtuous.

Most missed the point that there is already a full-blown tax revolt underway in South Africa. It is being led by the very looters of the public purse who are so indignant that some law-abiding citizens have said “Enough”.

The ANC cronies who receive large wads of kickback cash in brown envelopes or Louis Vuitton handbags certainly don’t declare that income. Nor do those who receive expensive upgrades to their homes. There is even doubt whether Jacob Zuma has actually filled in a tax return during his years as president.

Other ongoing tax revolts include: Refusal to pay e-tolls; withholding TV licence payments; rent boycotts, electricity payment boycotts, to name a few.

Strictly speaking, however, most of these do not fit the definition of a tax revolt.

A tax revolt is not tax evasion. It is targeted action, designed to achieve a particular outcome, by people who (under normal circumstances) would be keen to fulfil their responsibilities in terms of the social contract. Dutiful and diligent citizens who want to pay their dues, but who believe that funding a criminal syndicate masquerading as a government, will hurt, not help the poor.

I am one of these people. My life’s greatest privilege was having been raised by disciplined and dutiful parents, who from my very first salary cheque, encouraged me to save a little each month, pay all my taxes, live within my means, avoid bling, and fulfil my responsibilities.

I am among the millions who have become increasingly disillusioned by the extent of ANC corruption. The question arises:

Is it even possible, these days, to pay ones dues to society without funding a criminal enterprise in the process?”

And when I asked that question publicly, on Twitter, the response was overwhelming.

Many people contacted me either to express support or to pass on tips and advice.

One of the best was also the most unexpected

If you want a perfectly legal way of mobilising a targeted tax revolt, go to SARS’s own website, and look at Section 12J of the Income Tax Act,” I was told.

I did, and then consulted actuary Derrick Hyde, a director at a company specialising in forming, administering and managing Section 12J companies, who explained an entirely legal way to get 100% of your annual income tax refunded (even if it has already been deducted from your salary through PAYE).

It works like this, Mr Hyde explained: If you invest the equivalent of your annual income in approved funds that support small enterprises by investing in venture capital, you can receive a 100% tax deduction.

Those of us who have saved small amounts of money every month throughout our working lives will have sufficient savings to use this opportunity.

Before the end of this tax year (28 February 2019), anyone who invests the equivalent of their annual salary in an approved fund to support start-ups, will get all their tax refunded — while contributing to economic growth and job creation.

This means you can invest in what South Africa needs most — growth and jobs — while ensuring that none of your hard-earned money goes to fund criminals. On top of that, there may even be a return on the investment!

It is a no-brainer, lawful, and a great contribution to society. And it is especially accessible to the 1.8-million personal taxpayers who contribute about 90% of personal income tax in South Africa.

In this context, I have been pondering a paragraph in an analysis on my call for a tax revolt, by columnist William Saunderson Meyer. He wrote:

It is no coincidence that the SA Revenue Service, uniquely of all the government agencies, has never to my knowledge, publicly analysed this revenue stream by race. Since this is a government obsessed with the “correct” racial demographics, we can safely assume that this omission is because minorities contribute disproportionately to personal tax revenue, especially in the case of self-employed provisional taxpayers.”

To add insult to the injury of corruption, it has become standard practice in the ANC to blame minorities (especially whites and “whiteness”) for all South Africa’s problems, in order to divert attention from its own criminality.

It is time to say “enough”, not by withdrawing our contributions to society, but by investing them where they can really make a difference. And ironically, the Income Tax Act opens the door for us to do so, entirely legally.

I, for one, intend to make use of the opportunity (while continuing to read as much as I can about tax revolts that have successfully called errant governments to account, worldwide). DM


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