Tax obligation ‘could be met with labour’
14 November 2014
Posted by: Author: Amanda Visser
Author: Amanda Visser (BDlive)
Winston Churchill maintained that no idea was so outlandish that it should not be considered, and Alfred Nobel, founder of the Nobel Prize, said, "If I have a thousand ideas and only one turns out to be good, I am satisfied."
University of Pretoria tax department head Madeleine Stiglingh quoted both men in her recent inaugural address in which she asked a provocative question: whether all South Africans, irrespective of income, do not have a duty to contribute to society.
SA has an official unemployment rate of about 25%. Prof Stiglingh suggests that many of these job seekers can be put to work as statutory labour — so they can contribute something, besides money, to society.
Taxes were first introduced in Sumer, modern-day Iraq, where even the dead had to pay their dues in order to be buried. As tax systems spread and evolved, the principle established was that everyone who pays taxes should have a right to vote, and everyone who can vote has an obligation to pay taxes.
The social compact between citizens and governments today holds that citizens pay taxes and in exchange their governments provide efficient and reliable services.
A solid, balanced tax policy allows for equity — taxpayers contribute in proportion to their ability to pay, and equality is established where the law is the same for all, whether to protect or to punish.
Considering the true meaning of taxation and applying the principle of equality to SA’s tax policy, Prof Stiglingh is not convinced that the law is the same for all.
"It seems as if everybody is indeed entitled to the benefits they receive in the social compact, but I am of the opinion that the narrow definition of taxation — as the payment of money — has the effect that some citizens in the social compact receive benefits from government without any obligation to pay any tax," she says.
She quotes US economist Milton Friedman: "We have a system that increasingly taxes work, and subsidises nonwork."
Prof Stiglingh suggests that people should be mobilised in community projects if they cannot fulfil their obligations to the social compact by paying tax with money.
"It has been established that 5% of university graduates are unemployed. So are 16% of those who have nondegree tertiary education, and 29% of our matrics. All of them can read, and all of them can listen, and that is all our young children require to practise their own literacy skills," she says.
Econometrix director and chief economist Azar Jammine says there are several success stories of unemployed graduates who have been deployed in teaching mathematics and science. "It can be done, but it needs ingenuity, innovation and enterprise," he says.
But most unemployed people in SA are poorly educated and many are unemployable,
Mr Jammine says social grant payments have gone a long way to reducing SA’s tremendous inequality. It will need a "mind-set change" for people to contribute their labour by being willing to do community service in exchange for benefits from the government.
"Perhaps it is easy for us to pontificate and say give them any job to contribute to society, but the figure that astonishes me is that only 31% of children in SA have both parents in their families. Let people look after those children — especially the child-headed families — of which there are over 1-million in SA."
If necessary, people can be paid for community service, possibly more than they receive in grants.
Prof Stiglingh says people who pay taxes are already giving their "labour" to the government. In a year taxpayers in SA work for the government from January 1 until May 22 to pay the proportion of their salaries that is taxed. The number of days required to do statutory labour for community projects can be calculated for citizens who cannot pay taxes in monetary form.
Prof Stiglingh says she is aware that statutory labour proposals would require the buy-in of, and input from, experts in law, economics, politics and human rights.
But, as Churchill said, outlandish ideas should sometimes be considered.
This article first appeared on bdlive.co.za.