By Lize-Mari Labuschagne
Major concerns about taxpayer morale were raised at the 2019 Tax Indaba held in Johannesburg on Monday, 26 August.
The new commissioner of the South African Revenue Service, Edward Kieswetter, said at the tax conference that there has been a drastic drop in individuals’ and businesses’ confidence in the tax collector, which has led to an increase in tax avoidance and tax fraud, withholding billions of rand from the government.
The tax system was hit hard by years of corruption and management issues, which has led to a decline in tax morale and has dealt a serious blow to confidence in the government.
South Africans could be on the verge of a tax rebellion. Kieswetter warned that because of the years of corruption, South Africans are beginning to withhold their tax payments, which could force the country to apply for a bailout from the International Monetary Fund (IMF). Since 2015, tax income has fallen sharply due to poor economic growth and mismanagement.
Independent economist Thabi Leoka said in an email response to Bloomberg: “The IMF is used as a scare tactic to make the government aware that if we don’t implement the necessary policies, we may be forced to turn to them.”
Deputy Finance Minister Dr David Masondo said at the indaba that this period of instability coincided with growing shortages in tax revenue.
“From a shortfall of R7 billion in the tax year that ended in 2015, the under-collections have consistently increased to the latest shortfall of R57 billion. And this has happened over a period where tax rates have been increasing, with higher personal income tax rates across the income distribution, a new top rate of 45 per cent on incomes over R1,5 million, higher capital gains tax and dividends tax rates, increases in fuel levies and even an increase in the rate of value-added tax.”
According to Masondo, the success of South Africa’s tax system depends on three things.
Good tax policy: Firstly, we need to determine whether our tax policy design is suitable for the future, based on the key principles of good tax policy design.
Political leadership: Secondly, we must ensure that we have a strong, capable and technologically proficient revenue authority. SARS has suffered immensely from governance failures in recent years – to the detriment of staff morale, taxpayer morale and tax revenue collections.
Effective tax administration: Thirdly, we must spend more effectively and derive visible value for the revenue we collect. The developmental impact of our spending legitimises our taxes.
Masondo said that taxpayer morale would improve automatically if the government spent tax money more effectively and produced visible value from it.
Hierdie uitgawe van Solidariteit Tydskrif is amper so geskiedkundig soos die laaste paar maande waarin elkeen van ons gekonfronteer is met die Covid-19-pandemie wat die wêreld basies tot stilstand gebring het. Dit sal die eerste keer wees wat die tydskrif nie gedruk word nie. Daar was tot dusver, met 107 uitgawes agter die blad, nog […]
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