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January06

Tax revolt threat: heed the signs

DANIEL Miller (not his real name), now in his early fifties, is a fourth generation white South African. He’s a self-employed business consultant who supports a family of four, including his wife. I have known him as a fine gentleman through a common close friend for almost fifteen years.

White Square Button with Rally Group

White Square Button with Rally Group

Up to now, Miller has been a normal, hard-working businessman, regularly spending up to a week or more commuting essentially between Cape Town and Johannesburg – and more recently to other regional destinations – chasing project work and delivering on existing engagements. But Miller is no longer a happy man. In fact, he is disillusioned.

Until a few weeks ago, Miller’s consultancy was registered in South Africa, fully paying taxes here. But this has now changed after he recently moved his primary business registration offshore. He did this, he told me, because he no longer considers himself a happy and willing taxpayer.

It is hard, he said, to continue paying taxes when he sees so much brazen abuse of public funds through all manner of corruption: diversion of funds, misapplication of funds, poor or no project planning resulting in wastage and the deployment of ill-qualified, politically connected individuals to run strategic public assets, often resulting in mismanagement of budgets where such exist, failure, etc.

 

A growing community of the disillusioned

Going by conversations with several other people and the growing clamour of comments on various media platforms, Miller is not alone in this. Indications are that there is a fast-growing community of “Millers” out there. They all feel betrayed by the country’s political leadership and that the social contract has been broken and their trust eroded over time.

They’re all hard-working, entrepreneurial South Africans who come from all political and ethnic backgrounds. They feel that paying taxes here only helps to feed an increasingly voracious culture of greed and abuse. Unlike before, Miller and a few others told me at a recent gathering, they no longer pay taxes blindly, trusting that what they pay constitutes their contribution to enabling government to deliver much-needed public services.

Instead, they now deliberately work harder at finding ways to reduce their tax burden and to pay as little as they possibly can while remaining within the confines of the law.

 

Racist retorts not helpful

For those who are white in this growing community of the disillusioned, responding in any way by criticising government is always risky as they easily, and almost immediately, are reminded of their unfair historical privileges and get accused of being driven by racist, anti-transformation intent.

Their situation is not helped by another worrying phenomenon: a growing number of individual whites – the Chris Harts, Penny Sparrows, Allister Sparks and Diane Kohler-Barnards of this world – who have resorted to expressing or propagating what appears to be nostalgia for apartheid and disdain for black people in general.

Such conduct only results in reinforcing the bizarre, often misplaced, fear that all whites in South Africa are racist and that opposition parties like the DA intend to bring back apartheid. It is inconceivable that anyone could ever do so.

Strangely, despite the fact that participants at #ZumaMustFall demonstrations in Johannesburg and elsewhere in the country were much more racially mixed than in Cape Town, the Cape Town leg of the demonstration was taken by opportunists as an excuse for a racist backlash on the basis that it was white-dominated.

It is a silly notion that whites, who also pay taxes, need to have a (significant) black presence in their midst to be taken seriously when they demonstrate their frustration with the socio-political status quo.

The spectre of the race card hanging over their heads could make white citizens afraid of expressing their criticism of government, even when such criticism is genuine and has nothing to do with race.

 

Suspicion of white taxpayers bad for nation building

The perception that successive post-apartheid governments have a track record of ignoring warnings communicated to them is not helpful. It happened in the mid-1990s when the government, under former president Thabo Mbeki, was warned of possible energy shortages if no investment was made to boost energy supply through new build.

It also happened when warning lights began to flash about looming water shortages. It has been happening again in recent weeks with government warned of a possible tax revolt. The most recent warning of an impending tax revolt, communicated by Keith Engel, deputy CEO of the SA Institute of Tax Practitioners, has also been dismissed.

All South Africans have a role to play in building this country, irrespective of their ethnic make-up and political affiliation. Those who earn enough also have an obligation to pay taxes. But with this obligation comes the right to freely express their frustration at the deteriorating economic fortunes of what is after all their own country.

As part of the socio-political pact, government has the responsibility to be transparent and assure taxpayers that their contributions do not go to waste. Failure to do this will, over time, result in poor levels of trust by the taxpayers, a compromised tax base and, eventually, a collapsed state that is no longer able to provide social grants and essential public services.

The unwarranted, often misplaced, suspicion of the white taxpayer as unpatriotic is also bad for the crucial project of nation building, as it polarises our society. No one ever said post-apartheid nation-rebuilding was going to be a walk in the park!

The racial zero-sum game currently being played out in South Africa is unwinnable; the best it can do is push us all over the same precipice that Nelson Mandela and the visionary men and women around him worked so hard to keep us from falling over.

If we continue in the current direction, international confidence in the country’s trustworthiness as a reliable, predictable, destination for foreign direct investment will be further eroded – a dreadful eventuality.

  • Posted by donvalley
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