No law will change public resistance to paying tax
21 November 2018
Tax is the lifeblood of a government. When this blood suddenly becomes too little or is contaminated, it brings about a critical situation and one cannot help but wonder how long a country will be able to survive like this.
As a result of public resistance, South Africa presently finds itself on thin ice with regard to sustainability and tax collection. And no law will really change this.
The tax burden on South Africans has already exceeded the Laffer curve. That means that the country's tax payers are no longer willing to pay tax and are, therefore, constantly on the lookout for ways to avoid tax legally. What happened with the Gauteng e-toll system is now happening to tax on a national level.
The country has reached a point where the tax base is shrinking due to tax avoidance and a declining economy. The main reasons for this are the following:
- Service delivery is caught in a perpetual downward spiral. Why pay tax if it is not used correctly? For example, the available money is not used to build enough schools in Gauteng while the need for schools in the province increases every month.
- The government is acting as a job creation agency which is supplying more jobs than the private sector and as a result, it is in competition with the private sector in the labour market. Why pay tax if the government squanders the money on an unnecessarily inflated workforce?
- Poor policy based on outdated Marxist thinking is destroying the economy, job opportunities and, thus, also the tax base. Expropriation without compensation is an atomic bomb that will go off in phases and that will ultimately destroy everything. South Africa's capital outflow currently equals that of the 1980's when there were numerous sanctions instituted against the country. In subordinance to its new master, the EFF, the ANC has actually caused similar sanctions to be instituted to the detriment of the country and its people. In a time when Cuba is amending its constitution to recognise private property ownership, the ANC government is trying its best to destroy it. And the erosion of the tax base and social coherence is an inevitable result of all of this.
The FF Plus also feels obliged to warn the government against the severe consequences that the country will have to face if a settlement is not reached very soon in the Transnet pension case.
At present, the claim amounts to more than R100 billion and when the court finds in favour of the pensioners, Transnet will immediately be downgraded to junk status, which will have a domino effect on other state entities and ultimately the state itself will plummet to junk status.
If they do not come to a fair settlement very soon, the government will send South Africa over the edge. And then there will be no tax base to use as a financial buoy. Settle now and make it a fair settlement.
Issued by Anton Alberts, FF Plus chairperson, 21 November 2018
