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‘Increase in corruption could trigger tax revolt’

Friday, 06 November 2015   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneyweb)

Judge Dennis Davis shares his views on inequality and wealth taxes.

The greater the level of corruption in South Africa, the less tax integrity the country would have and the greater the possibility of a tax revolt.

Speaking at the Fourth Annual International Economic Law Update hosted by the Mandela Institute at the Wits School of Law in conjunction with the World Trade Institute and Swiss Economic and Cooperation Development, Judge Dennis Davis, chair of the Davis Tax Committee, signalled this warning.

He said people of all classes, genders and race groups have been asking him the same question: Why should they pay tax when the level of corruption in South Africa is endemic?

His observation comes just two weeks after Finance Minister Nhlanhla Nene in his Medium-Term Budget Policy Speech (MTBPS) lowered his economic growth forecast for 2015 to just 1.5% from 2% in February – signalling a challenging road ahead for tax collection. At the same time expenditure has been difficult to contain. A major point of contention in the MTBPS was the public sector wage increases, which at 10.1% was significantly higher than the inflation figure of roughly 6%.

Government is trying to secure income to finance its development goals but also to narrow its forecasted budget deficit of 3.8% of gross domestic product this year to 3% over the medium-term.

While the Davis Tax Committee’s mandate is focused on the revenue side of the tax equation, Davis stressed that South Africa carefully had to consider and debate the need, sustainability and impact of its expenditure decisions.

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