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News & Press: Opinion

A Psalm for Eskom

20 July 2012   (2 Comments)
Posted by: By Stiaan Klue, Chief Executive
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The Taxpayer is my source of income,
I lack nothing.
He feeds me at family fun days,
funds my budget and,
refreshes my balance sheet.
Even though Terence reports
unauthorised, irregular, fruitless and
wasteful expenditure,
I will fear no evil,
For the taxpayer is with me;
Your taxes and your savings,
comfort me.

The whole Eskom debacle has given a new meaning to the term "public servants". Rather than being served by Eskom I am sure that a lot of taxpayers are feeling that we are serving them. They get to arrange family fun days on our expense and get automatic rates and salary increases every year.

In comparison the average South African family faces increased costs on a wide front: higher taxes, e-tolls and increases in basic household expenses are forcing families to turn over every penny. It is a real struggle to pay the mortgage and put food on the table.

Mike Schussler estimates that if South Africa were to pay the average civil servant the same as the average formal private sector employee we would immediately save R100 billion a year - this is an equivalent of five Gauteng freeway projects a year - free from any tolls and with no extra taxes required.

If South Africa were to be so bold as to pay civil servant only 90% of their private sector equivalents - we could build a coal fired power station at a cost of R111 Billion every year. We will be able to do this without any increases in electricity prices.

It was recently reported that Eskom spent R36million on "family fun days" to increase the morale of its workforce. To put this into perspective: it is enough money to power more than a million poor households with a basic free electricity subsidy for a month.

This comes on the back of a 16% tariff hike and flies in the face of President Jacob Zuma's call on the parastatal to cushion the price blow for consumers.

The media reported indignation from Unions to Greenpeace. According to Greenpeace the millions Eskom spent on its staff parties was "unacceptable".

"It is completely unacceptable that Eskom spends money on parties, while the people of this country face skyrocketing electricity prices, and more than 12 million South Africans still don't have access to electricity," it said in a statement. Lemias Mashile, deputy president of the South African Civic Organisation, said these millions spent on parties was an insult to the poor. "There is no logical linkage of misusing so much and then for Eskom to cry for increased electricity tariffs," he added. Paul Crankshaw, the deputy chairperson of the National Consumer Forum, said: "This sounds to us like a strange way of motivating staff and encouraging teamwork. Sound and professional management on every level - to build capacity and accountability - is what motivates and raises morale in the long-term, not family picnics."

Conclusion

The service taxpayers are getting from parastatals is unacceptable. This is only compounded by Auditor-General reports of wasteful and irregular expenditure.

Taxpayers and tax practitioners are constantly being reminded that paying tax "is the right thing to do". Running an effective state is also the right thing to do!

Tax practitioners are publically scolded by SARS and the Minister of Finance for their non-compliance. The Minister of Finance, in his Budget Speech stated that tax practitioners in their personal capacity owe SARS R260 million whilst at the same time having 18 000 outstanding returns.

It is unacceptable to have this level of non-compliance within our ranks as tax practitioners. SAIT is committed to compliance by its members. We remain the only Institute that requires a tax clearance certificate as part of our membership application process. This ensures that our members' compliance levels are amongst the best in the industry.

Although the R260 million is unacceptable - it pales in comparison to the R25 billion reported by the Auditor-General.

Comments...

Sally M. Hansen (Fleming) says...
Posted 24 July 2012
Morning - an excellent comment by Stiaan Klue. The 'whip - lash' environment which tax practitioners operate is very daunting. Further, as active participants in the financial sector where serious problems are noted and identified , it is sad that the government do not heed the advise given, which if applied would provide a greater future for all .
Brian L. Taylor says...
Posted 23 July 2012
I agree with your sentiments. It appears that the taxpayer must implement austerity programmes so that the parastals can have parties. It gets back to accountability and ability to manage.As this government has no desire to make their people in public office accountable,are we surprised that tihings like these parties happen?. We in business know that profits are made as a result of efficiency and cost management including chargiing market related prices. In the case of Eskom its management appear to bear a "charmed" life and do what they like without fear of any action being taken. I am amazed, they still have not learned how draft performance based employment contracts for their executives,despite having paid off serveral CEO's prior to completion of their term of office. How many of these executives would be employed if skill requirements and experience were considered at the time of their appointment? Brian Taylor Brian Taylor

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