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Is SA heading for a tax revolt?

Monday, 07 December 2015   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneyweb)

Taxpayers fume about wastage and corruption, but large-scale evasion seems unlikely.

There seems to be increasing concern that South Africa could be heading for a tax revolt.

This comes amid an outcry against corruption, wastage of taxpayer money and the fact that the country’s deteriorating fiscal situation will in all likelihood trigger tax hikes next year.

In November, judge Dennis Davis, who heads up the committee tasked with a comprehensive review of South Africa’s tax system, warned that 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.

Kyle Mandy, tax policy leader for PwC South Africa, says while there is always a risk of a tax revolt, one also has to face the facts: A tax revolt is not an event and does not happen overnight.

"It is a creeping trend that starts to happen in terms of a breakdown in tax morality and reduced levels of compliance and it will happen as a process over a period of time, if it happens at all,” he says.

But whether the country is really heading for a tax revolt, may be a question of semantics. For some, taxpayers speaking out against corruption and wastage already hint at the start of a tax revolt, while others believe taxpayers would have to engage in large-scale tax evasion or stop paying taxes altogether for it to really be considered a tax revolt.

Of course, in a system where most individuals’ taxes are withheld by employers and paid to the South African Revenue Service (Sars) on their behalf there is limited scope to really take significant action. Considering the potential reputational damage corporates could face in the wake of such a step they will most likely be highly reluctant to engage in any concerted effort to intentionally stop paying taxes – even on behalf of others in the case of employees’ tax or value-added tax (VAT).

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