The tax debate, internationally and in South Africa, is
progressively focusing on closing perceived tax loopholes (in order
to boost collections) and increasing self-assessment through
vigorous auditing by the tax authorities.
In pursuing this goal, Finance Minister Pravin Gordhan has
appointed Judge Dennis Davis as the chairman of the Davis Tax
Davis has been quoted as saying that the challenge for the
committee is to design a tax system that, among other things,
achieves "the spending needs of the government and its
The collection of taxes is important but addresses only one part
of the equation.
Taxpayers are constantly told by Gordhan, the South African
Revenue Service and by tax practitioners that paying their taxes is
the moral thing to do and, in this way, they contribute to
uplifting our country and, to some extent, redressing the wrongs of
What is not being addressed effectively is the public perception
of rampant corruption and the misuse of public funds, which often
runs into the billions or rand. Perceived levels of corruption
remain unacceptably high.
The global organisation Transparency International ranked South
Africa 72nd out of 177 countries last year.
Public Protector Thuli Madonsela, in her annual report presented
on October 15 last year, was quoted as saying: "All that I can
say to this nation and this committee is corruption in this country
has reached crisis proportions."
Gordhan, at a recent Discovery Invest Leadership Summit,
described corruption as "a disease of the system that needs to
be stamped out".
Public mistrust is seen in a number of ways, such as in the
level of outrage expressed in the form of service delivery
protests. It is understandable that many people respond with anger
to increased taxes and toll fees if they perceive that the existing
taxes are wasted.
It is a recognised fact that taxpayers are happy to pay their
taxes when distribution and expenditure are transparent and
Many South African taxpayers have been comfortable to pay taxes
on the basis that they were being used to uplift previously
disadvantaged areas and services. Thus, if the perception is that
this is not the case, evasion may increase.
Despite efforts by the government to deal with corrupt
politicians, such as those by Gordhan in last year's budget
speech and medium-term budget policy statement, not enough is seen
to be done.
Perhaps the Davis Tax Committee should take a tip from the
ancient Greeks. Their governments used a system of liturgies, which
required the rich to pay for certain government projects —
instead of paying tax.
Surprisingly, the rich often spent more on these projects than
required, tacitly acknowledging that as they had benefited from
their society, they had an obligation to give back. Extending this
principle to South Africa, the suggestion would be for the
government to extend public-private partnerships to public
In brief, this is how it could work.
The Tax Act would contain an annexure of approved projects, such
as hospitals, schools, public roads, etc.
Taxpayers could apply, instead of paying the tax due over to the
government, to actually build the hospital, school or road, which
could then bear their names.
In this way, tax morality would increase — pride in
completing the project and uplifting the community and ensuring
that taxpayers' funds are used appropriately, avoidance of
corruption, etc — and taxpayers' funds would reach their
intended destination. The principle should be available to
corporate and high-net-worth individuals.
It has been said that you do not fight corruption by fighting
corruption. Traditional methods of investigation and prosecution
need to be accompanied by efforts to instil an attitudinal change
and to bring about a new culture of accountability and
As ridiculous as the suggestion of taxpayers undertaking public
work projects may sound, the satisfaction, social recognition and
legacy that a completed project would bring to the taxpayer is more
than any money could buy.
This article first appeared in BDLive, 14 February
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