Tax Revolt Both Irresponsible and Highly Unlikely, Says Economists

Western Cape Premier Helen Zille’s call for a tax revolt is “quite anarchist” as it promotes civil disorder and disobedience, an economist has said.

Last week Zille tweeted that she is prepared to lead a tax revolt if government does not take legal action against the corrupt.

But a tax revolt would be difficult to pull off in SA, economist Thabi Leoka told Fin24 by phone.

SA is not on the brink of a tax revolt, but when a senior politician advocates for a tax revolt, it is dangerous.

“Tax avoidance in the country is illegal,” she said.

‘Anarchist, irresponsible’

“Taxes and VAT form a big part of the fiscus. We don’t want those who have been paying taxes to stop paying taxes because this will put the fiscus in jeopardy.

“At the very extreme, this is quite anarchist – because you are promoting civil disorder and civil disobedience and it is very irresponsible.”

Leoka added that a tax revolt would affect the poor and vulnerable the most as they are most dependent on government services. “I get the fact people are upset about corruption, and what has happened in the country in the past few years… A tax revolt is not the way to correct that.”

Professor Jannie Rossouw, head of the Wits School of Economics and Business Science, said that the tax revolt idea seems like a new political campaign.

Rossouw said that a tax revolt was not impossible, as confidence in the SA Revenue Service had been shaken in recent years. But, arranging such a revolt is not easy, because employers are obliged by law to deduct taxes on employee incomes through the Pay As You Earn system.

“They could stop paying VAT, but they would be contravening the law and SA businesses are careful not to contravene the law.”

‘Highly unlikely’

Bernard Sacks, senior tax partner at global auditing and consulting group Mazars, this week said a tax revolt was “highly unlikely”.

“There would have to be an understanding between an employee and employer to stop transactions to various accounts to effectively have a tax revolt. You would have to go to the grocery store and insist with the store’s management that they do not carry over any portion of what you pay them to VAT.”

Mike Teuchert, national head of taxation at Mazars, added that SARS has a sophisticated tracking systems. “It will be difficult to execute anything remotely effective.”

Jerry Botha, managing partner of Tax Consulting South Africa, put Zille’s comments down to political campaigning.

He added that there was no clarity on which taxes would form part of the revolt.

For example, consumers could have a sin tax revolt by cutting out tobacco or alcohol purchases.

“Where the call is to not pay your corporate taxes or income taxes, this would be foolish to listen to, as this is a criminal offence,” he explained.

Source: Fin24
Authored: Lameez Omarjee and Khulekani Magubane

Featured In