Zille’s tax revolt: It may be tempting, but ...
Times Select asks the experts whether Helen Zille's latest proposal is one of her worst or better ideas
It may be very tempting, but a tax revolt is certain to cause the SA economy to collapse, according to economists surveyed by Times Select.
Thabi Leoka said that if South Africans embarked on a tax revolt, the country would risk another major international downgrade.
“Such a revolt will affect the poor the most, compared to the rich. Food prices will just escalate and jobs will be lost as many investors will pull out of the country. There will be no service delivery as government will not have funds to fund such services,” the economist said.
A tax revolt would be no different from dodging tax, which is illegal, she added.
The debate around a tax revolt started when Western Cape premier Helen Zille wrote on her Twitter account last week that South Africans should go on a tax revolt to force the ANC government to punish corrupt leaders.
Zille said if those implicated by the Zondo state capture inquiry were not jailed within a reasonable time, she would organise a tax revolt. She said she had tried the electoral route for years, but it seemed voters “enjoy” voting for corruption.
Economist Dawie Roodt echoed Leoka’s statement, saying it would be the beginning of the end. “It will have a devastating effect on the poor. If we start the process of not paying tax, people will never pay again and the country will disintegrate completely,” Roodt said.
But a revolt was very unlikely partly because of the practical problems around it. It would be very difficult for citizens to withhold tax because of the way it is collected – through the employer.
Although it has worked on a smaller scale in SA.
“For those small issues like e-tolls and paying TV licences, it can work, but for bigger companies and with income tax, it would be very difficult not to pay,” he explained.
Zille said accountability was the essence of a democratic government, but that all the mechanisms of holding power accountable were failing, one by one. “The criminal justice pipeline has been captured by power abusers in order to prevent accountability. There have been hundreds of very serious and substantiated allegations of corruption, in terms of which no one has yet been charged or convicted,” she said.
Speaking to Businesstech, Coenie Vermaak, chief executive of toll collection group ETC, said withholding tax was illegal, and a tax revolt would only make things worse – as it did with e-tolls.
Vermaak said tax revolts simply put an additional burden on those who stay on the right side of the law. He claimed that since the revolt against e-tolling started in 2013 there had been a severe impact on the country’s roads.
Civil action group Outa said a formal tax revolt would require the active participation of businesses and industries at large, particularly big business – and that’s where the challenge lay.
“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,” Outa says on its website.
“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.”
According to the SA Revenue Service (Sars), business or company tax in SA is payable by all registered businesses in the country.
SA-based businesses are also liable to pay SA corporate tax on their worldwide income. Companies that are based outside SA but operate in the country or have a branch here, pay tax on income derived from within SA only.
According to Sars, if a company has employees, it is responsible for administering pay-as-you-earn (PAYE) for employees, the Unemployment Insurance Fund (UIF) and the Skills Development Levy (SDL).