South Africans would support a tax revolt: report

Business interest group Sakeliga has published a new survey showing that the lockdown and corruption are pushing taxpayers towards a breaking point.

The survey, which was conducted online among Sakeliga members, also looked at participants’ inclination to support anti-tax campaigns.

The data shows that:

  • 95% of respondents said that the lockdown decreased their willingness to pay tax;
  • 90% indicated an inclination to delay tax payments for as long as legally possible;
  • 60% would even consider illegally withholding tax if encouraged to do so, and if it could end lockdown quicker.

The respondents were also asked to indicate whether they would support a campaign that encourages people to – as far as is legally allowed – defer payments of taxes and other government bills as a way to protest against the current Covid-19 restriction measures.

Slightly more than 88% of respondents indicated that they would support such a campaign. Only about 3% would definitely not support it.

Of the participants, 4% were unsure about this and a further 3% withheld feedback (would rather not answer) and about 2% made other comments.

Respondents were also asked if they would support an organised campaign to withhold taxes, even if it would be illegal, to protest against the current Covid-19 measures.

Nearly 62% of the respondents indicated that they would even support an illegal campaign to protest the current Covid-19 regulations.

Around one in 10 respondents (12%) reported negatively. 17% was unsure, 5% would rather not answer the question, and 3% made other comments on the question.

Piet le Roux, Sakeliga chief executive, said that a ‘new normal’ in tax willingness is rapidly taking hold across the country.

“The new normal for tax willingness is going to be much lower than before. We recommend that government and analysts compensate for this trend in their estimations of future fiscal deficits. Businesses are becoming unusually motivated to decrease their tax payments.”

Le Roux said that, from participants’ comments and the state of the country, it is evident that lockdown, corruption, mismanagement, and generally harmful government policies have created a perfect storm.

“A senior executive at one of South Africa’s iconic companies recently put it to me that he considers paying tax in South Africa a possible violation of the American Foreign Corrupt Practices Act, since the money largely funds harm, mismanagement and corruption.

“While this interpretation is probably, legally speaking, incorrect, it is morally striking. This moral dilemma is weighing with increasing burden on business people in South Africa: they consider it their duty to serve and fund the common good, yet they increasingly view tax as detrimental to society because of how it funds mismanagement, corruption, and harmful policies.”

Corruption and taxes

South African Revenue Service (SARS) commissioner Edward Kieswettet has previously warned that taxpayers could start withholding their tax payments due to years of corruption.

In a 2019 conference, Kieswetter said that falling trust in the collector by individuals and companies had led to rising levels of tax avoidance and fraud, bleeding billions from government.

“When public trust wanes, as is the current case, then taxpayers feel morally justified to withhold or manipulate their taxes,” Kieswetter said.

“When revenue collection is undermined it traps us in a vicious cycle of revenue decline, as we’ve experienced, and consequently the need to go with begging bowls to borrow money, which effectively mortgages our future.”

The ban on alcohol and cigarette sales has also had a direct impact on the country’s tax collection.

Excise duty collection, which includes levies on alcohol, tobacco products and fuel, fell by 42% year-on-year in the three months up to June, SARS said in July.

However, value-added tax (VAT), personal income and other taxes were also significantly lower. In all, Treasury data showed that total gross tax revenue was down by 23.6% year-on-year between April and June 2020.

Bloomberg calculated that South Africa lost more in tax revenue in the first three-and-half months of its fiscal year than it borrowed from the International Monetary Fund and the African Development Bank combined.

To help the battered economy and fight the pandemic, South Africa has borrowed R70.6 billion ($4.3 billion) from the IMF, R5 billion rand ($294 million) from the AfDB and $1 billion (R17 billion) from the New Development Bank.

In February, the government left taxes unchanged due to ‘weakness in the economy’ and opted to broaden the tax base, the Treasury said at the time. It has since said an additional R40 billion in taxes needs to be raised over the next four years.

Read: New law aims to help criminally prosecute tax offenses in South Africa – what you need to know

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