At the end of the day, all tax is paid by individuals.Not just wealthy individuals.There are also those who don’t earn enough to pay income tax, pay VAT on everything that they buy, and are therefore taxpayers too.
Currently, via the Constitution and other legislation, the taxpayer is afforded many rights; however, there are no mechanisms for them to be realised.Taxpayers need to be educated as to their rights.Many taxpayers don’t know their rights and are sometimes so overwhelmed by the powers of SARS that they put up no resistance.Also, the individual and small companies have far fewer resources with which to tackle SARS compared to a company.
As such it is vital that institutions such as an ombudsman be established if we are to enjoy these rights.We aim to strengthen taxpayers’ rights which are of enormous benefit to the country; research has shown that entrenched rights enhance voluntary compliance.
Since launching, we have received numerous stories about how taxpayers are so frustrated at being treated unfairly and with blatant disregard of their rights.There are many small businesses and individuals who have had to write off thousands of Rands because there are no institutions to mediate their disputes; of course, the High Court is just too costly.We are therefore not only exposing the abuse of taxpayers’ funds, we are also targeting taxpayers’ rights as an absolute necessity.
What specific rights are you looking to protect in terms of the Constitution or other legislation?
We would like to see the formation of a tax ombudsman. We want to ensure constitutional rights as well as ensuring that SARS follows correct procedure according to the Income Tax Act.
What would the functions be of the ombudsman?
An ombudsman would serve as an institution which protects the rights of taxpayers and ensures that they are not violated by the tax authorities.Such a body would oversee that tax collection procedures are not abusive and unconstitutional.This is something that takes added significance in South Africa given SARS’ proposed new collection methods which many tax commentators have labelled as legally ambiguous Apart from a procedural oversight, an om-budsman would be a body to which aggrieved individuals could seek recourse if they feel their rights are infringed upon.Presently, the only practical avenue of redress open to taxpayers is via the High Court.
There is almost unanimous consensus that this process is prohibitively costly for most individuals to pursue in their personal capacity and, as such, South African citizens are left without a forum to mediate their grievances.An ombudsman would fill this void.
Essentially, a tax ombudsman would function as an independent and impartial mediator for tax-related disputes as well as ensure that procedures adopted by the revenue authority are constitutionally and legally sound.This would have an enduring impact on South African citizens as it would cultivate greater trust in the country’s tax system, foster voluntary compliance and engender accountability on the part of government.All of which takes added importance given South Africa’s growing middle-class tax base.
On a broad level, this initiative recognises the importance given to the development and consolidation of democracy and the rule of law as well as fundamental freedoms.Furthermore, it encourages civil society in democratic participation becoming an effective force for positive change.
A tax ombudsman is the practical realisation of citizens’ constitutional rights and the rule of law within the tax sphere.Similar democratic institutions are prevalent internationally and South Africa should aspire to this goal.After all, one of the most complex relationships between the State and the individual is taxation; ensuring taxpayers’ rights via an ombudsman is thus crucial in the advancement of a liberal democratic society.
When abuse of taxpayers’ funds is discovered, what is the game plan to take action?
The media has been very good at identifying wastage; however, once the headline has been forgotten, the issues disappear, only to resurface again once the next incidence of abuse is highlighted.We are tracking these abuses and will challenge departments and government to make good on promises to sort out the corruption.We are also looking into legal channels where individuals who have been found to be corrupt are required to pay back the funds – in much the same way as SAA is dealing with the issue of its previous CEO’s spending.
It is not enough to simply fire people. We also aim to engage with Treasury and to support initiatives to recover or discover abuse of funds such as the huge amount spent on World Cup tickets.One example of this would have been Travelgate.It is probably too late to recoup the money now, but had we been around at that point, that would have represented an ideal opportunity to demand the repayment of misappropriated funds.
In the words of Finance Minister, Pravin Gordhan, from the Medium-term Budget Policy Speech delivered on 29 October 2009:
•We will not tolerate corruption.
•We will act forcefully against wastage.
•We will insist on value for money for the billions that we spend.
These words give us hope for the future.
Do you have access to approved government budgets to see where misappropriation has occurred?
At this early stage, our resources just don’t allow for this amount of in depth primary research.We are reliant on questions posed by opposition parties in parliament. In the future, we would like to move away from this and to use our own resources to identify these issues as the Taxpayers’ Foundation.
What types of abuse have you identified and what seem to be predominant?
The World Cup tickets and spending on luxury hotels is a hot topic at the moment, but in general there seems to be a real lack of accountability and understanding that the money comes from taxpayers and is not government money.Every day we are seeing new announcements on corruption.We see this as positive because in many cases it is actually cleaning up by government.However, there is a concern that it may depend on politics as to who is named and shamed.It is of concern that the ANC came out and said there was nothing immoral or illegal with the luxury spending of certain ministers.It is a similar argument used by international banks which are paying out massive bonuses after being bailed out by taxpayers.Yes, there is nothing illegal about it, but it is hardly moral.
We are not only concerned about abuse, we are also concerned about the wasteful expenditure taking place that we don’t often think about, but which needs to be rationalised.For example:
•Three capitals – a vestige of the old Union of South Africa, which really is of no consequence in the SA of today.In particular, parliament housed in Cape Town and administration housed in Pretoria results in an enormous duplication of resources and wasted travelling time.This could be far better spent elsewhere.This could be an opportunity to hold a referendum around this subject.
•School textbooks – a rationalisation has already been announced (centralised purchasing) which should save the DOE about 70% of the expenditure on textbooks.This should also be extended into other areas of procurement, to realise similar savings and cut down on corruption.So it is about arresting greed, achieving broader upliftment – making SA a better place for all.
What should taxpayers do if they have a grievance?
The Taxpayers’ Foundation does not aim to handle individual disputes or offer advice.We focus on institutional changes to empower the taxpayer to seek recourse via ombudsman-like bodies which will be economical, expeditious and effective; just as they are in so many other countries.We will engage with tax practitioners to identify systemic problems within SARS.It is because of the need for an independent body to deal with grievances that we are campaigning for a tax ombudsman.
What are you hoping to offer taxpayers?
A strengthening of their rights and a voice that challenges the expenditure of taxpayers’ money from a non-political viewpoint.At the very least, on the expenditure side we would hope to arrest future wastage.If we become a form of conscience, then government ministers may begin to behave differently.In his maiden budget speech, Minister Gordhan stated the following:
"Our moral contract with the taxpayer is that we will take every measure possible to allocate public spending towards the priorities that they support and that spending will be as efficient as possible.The resources we have at our disposal belong to the people.Treasury has a goal of ‘eliminating ineffective programmes and generally improving value for money’.”The Taxpayers’ Foundation will endeavour to strengthen his cause.
How are you funded? Is it purely by donations? If so, are you being well supported?
We have received some seed capital from a corporate backer and we have interest from other corporates who have indicated a strong interest in supporting us, financially and through intellectual capital.We are primarily funded by membership.This is a current challenge.Many people agree with our ideals but haven’t made a commitment by signing up.As we build awareness of the Foundation through our campaigns, we hope to bring more members on board.
Although the funding from individuals helps, we really want more people to join in order to give us clout. The more people we can represent, the louder our voice will become and we can be more of a force to be reckoned with.Our Foundation is being followed with interest by both SARS and National Treasury.We have received positive feedback from them in bringing a reasoned perspective of the taxpayer to the debate and have secured high profile meetings in the coming weeks with National Treasury.As soon as we can boast a serious body of members, we will have more success in making a difference.
How can taxpayers join the Foundation?
They can access us via the website www.tpmsa.org.The annual membership fee is R50 (less than R5 a month) and we issue a newsletter monthly.The reason that we charge a nominal membership fee is in order to ensure that we have bona fide members and the cost is low in order to be affordable.Full name, e-mail address, postal address and postcode are required.Phone numbers are optional.The Foundation is supported by some very prominent people in the tax profession who are concerned about the future of the country.The Taxpayers’ Foundation is currently forming strategic alliances in government.
TAXTalk appreciates the efforts of the Taxpayers’ Foundation and looks forward to reporting on their continued success.We will have a dedicated column to their progress in our future publications.
Source: By TaxTALK