In recent months, OUTA has noted a dramatic increase in calls for a Tax revolt within South Africa. Our social network pages are littered with requests for OUTA to coordinate an effective tax revolt aimed at forcing the Government to halt the gorging of our nation’s ever-dwindling Taxes. Because the bulk of our taxes come from three main sources, (VAT – value-added tax, PAYE – Personal income tax and Company Taxes), a formal tax revolt would require the active participation on businesses and industries at large, particularly big business and that’s where the challenge lies. More challenging is the fact that this idea is not as simple as arranging a trust account into which everyone can pay their taxes, until Government concedes to the error of their ways.
While the notion and apparent merit behind thereof may seem sound, the impracticalities and negative impact of a full blown tax revolt will be most devastating to the very people who are calling for it and more so the poor, as opposed to the handful of leaders who are perpetrating the country’s woes. The fact that national security will no longer be paid for, fuel reserves, water supplies plus other strategic aspects of every day societal living will grind to a halt, needs to be more seriously contemplated before a tax revolt can start to be applied. And then know this, the Government has laws which enables them to extract those funds from the trust account anyway. This is all before the decision as to who will manage the trust funds and referencing as to who has paid what amounts. Simply put, you don’t want to go there.
What society also fast realising, is that there are other ways to ease the frustration of Government’s bureaucracy, maladministration and lack of will to tackle corruption. The ability to pay less in taxes does not require a mass organised and structured approach to which all will march to the same agenda. In the case of the nations most successful tax revolt, is one that is less organised and more personalised. We call it the “Silent Tax Revolt”, where suppliers are encouraging their customers to agree to cash payments without receipts.
Recently, an OUTA supporter stated that “if the tax system is perceived as being unfair, or tax revenues are squandered through rampant corruption, the citizens will turn to methods and effort to avoid paying taxes.” And he is not wrong. We recently heard of a person with high moral standing explaining that he paid for work done by a supplier with cash and without an invoice, saying it was something he would never have considered in the past, but the time has come for a new moral compass to counter Government’s conduct. Given the behaviour of Government and SARS in particular, it was clear that this person didn’t struggle with the question of morality when assisting with a quiet tax break for the supplier.
Minister Gigaba refers to the above conduct as a decline in tax morality, but the tax-paying citizen justifies this conduct as retaliation to the immorality of Government’s maladministration and immoral tax spending behaviour. The effectiveness of the silent tax revolt is that it does not require an overt or organised plan but instead, it merely circulates cash to evade the declarations of VAT, PAYE and Company Tax transactions. And while it’s unlawful, it’s virtually unenforceable. It becomes a game that the once moral taxpayer now feels good about and justifies participating in by deflecting his / her actions to the immoral tax-payer supreme, the President himself, who seems quite happy to ignore his need to be tax compliant. A case of “following our leader.”
The greater the level of perceived corruption and maladministration by Government, the higher the breakdown in trust and along with it, the attempts from society to be less morally obliged to paying taxes, whenever this is possible to do. Add to this, the non-payment of e-tolls, TV Licenses and other easily avoidable taxes – which suffer from high costs and effort to recover – have become easy targets for society or participation in. Both the academic world and the broader tax community has warned that the longer corrupt leaders remain in power, the more likely the justification for tax morality to suffer. This is not rocket science and Minister Gigaba is very aware of these consequences.
Adding fuel to this fire, is the ongoing tax increases and new taxes piled onto an overstretched and declining tax base, often leaving tax payers with no option but to find ways to circumvent the tax net to balance their books. The problem for Treasury becomes worse when there are declining credibility and competency levels within SARS and Treasury, due to recent purging and resignations of experienced members of their leadership team, as a direct consequence of political interference by the Presidency.
The tax-payer’s declining compliance to tax rules and policies is a matter that even the embattled SARS Commissioner, Tom Moyane is aware of, following his recent admission that “South Africa is seeing the beginning of a disturbing trend whereby tax compliance levels are beginning to fade”. More concerning though, is Mr Moyane and his boss(es) inability to realise their own role and impact applied in this matter.
In summing up, the ability to pull off a full blown formal tax revolt will be almost impossible to organise and one which may have worse than imagined unintended consequences, if it were ever able to be pulled off. Instead, we believe that society should work harder at holding those in power who abuse their authority to account for their conduct, by supporting effective civil intervention movements who do a lot of this work on behalf of society. Doing so, combined with the growing tax immorality burden, will stifle Treasury’s ability to squeeze more taxes from the declining tax base. This in turn can only have one outcome, the realisation that what is really required is an ‘immorality bypass’ of those at the top, by removing the real rot within the ruling party’s ranks.