Have South Africans reached the point of no return due to the ridiculous levels of mismanagement and corruption being experienced in the country? With continuous, damaging decisions being inflicted upon each and every one of our lives, can the Government expect to see the masses unite and participate in a common cause to save our country from complete and utter collapse?
According to a new poll by the business interest group, Sakeliga, the lockdown and high levels of corruption are pushing businesses’ willingness to pay tax, off a cliff.
Sakeliga’s poll shows that a head-spinning 95% of respondents stated the lockdown has indeed decreased their willingness to pay tax.
In fact, 9 out of 10 indicated they were inclined to delay tax payments for as long as legally possible. A further six out of 10 will apparently even consider withholding tax illegally, if encouraged to do so and if it can fast-track the end of the lockdown.
Sakeliga CEO Piet le Roux, says, a ‘new normal’ in tax willingness is swiftly taking hold.
“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 states from participants’ comments and the state of the country, evidently 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.”
He explains while this interpretation is probably, legally speaking, incorrect, it is morally striking.
“This moral dilemma is weighing with an 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,” says Le Roux.
Further highlights from the poll indicate:
- 84% of the participants said the government handled the Covid-19 outbreak badly, while 14% were ambivalent. Only a meagre 2% said government handled it well.
- 61% of the participants indicated that their business in question suffered huge losses due to the Covid-19 restriction. About 29% indicated moderate losses. For 6% of participants, sales were the same or better during the lockdown period.
The respondents were 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 restrictions.
According to the poll, slightly more than 88% of respondents indicated they would support such a campaign. Only about 3% would not support it. Of the participants, 4% were unsure.
Sakeliga highlights that 883 people participated in the self-selecting poll, conducted out of the more than 40 000 individuals in Sakeliga’s membership and network. Most participants responded via an email link, and around 10% contributed through links accessed on social media.
While the poll is not a nationally representative poll, Sakeliga’s analysts feel the poll is an accurate indication of a new normal in taxpayer sentiment, even after compensating for self-selection among the non-random poll contributors.
How legal is a tax revolt and how do you join in?
According to Jean du Toit, a Senior Tax Attorney of Tax Consulting South Africa, a tax revolt is a situation where taxpayers act in solidarity to abstain from their civic duty of paying their taxes.
A tax revolt may be occasioned where taxpayers do not agree with the manner in which the government chooses to “spend” the monies they (Taxpayers) had to part with, which du Toit explains is likely applicable in the present context.
Under a tax revolt, one may broadly identify two types of taxpayers; those who simply do not and never have paid taxes, perhaps out of disdain for the very concept thereof and those who, from some misguided sense of virtue, feel justified in discontinuing their tax obligations.
According to du Toit, a Legal tax revolt is where taxpayers deprive the Taxman of revenue by using legal means.
“On a small scale, this may be achieved by consuming zero-rated goods only, or by kicking your smoking habit and adopting a teetotal lifestyle, thereby depriving the state of VAT and sin taxes,” he explains. However, kicking the nicotine habit and not drinking will not resolve the issue, due to the ban on alcohol and tobacco sales.
Du Toit says a more drastic and far more effective, yet legal, act of defiance would be to cease your tax residency. This will see SARS no longer have a claim to your worldwide income and capital gains.
There is no time like the present. Firstly, you need to realise that South Africa as a whole, is truly in the worst state it has ever been in or has been in for a very long time. Understanding that sitting back and hoping for a better future or a dramatic change in Government, is naive. Therefore, taking the correct legal steps in order to save not only your country but your very day to day life, is now in your hands.
With businesses showing an unwillingness to pay taxes, what your thoughts on participating in a tax revolt? Do you feel a campaign such as this will ensure the Government listens to us? Or do you feel a tax revolt can cause further negative implications on South Africa’s economy?
Share your thoughts and views with us in the comment section below.
Author: Quinton Boucher
Edited: Calvin Swemmer