Budget 2023
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The taxman’s revenue addiction is our problem

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Wayne Duvenage is the chairman of the Organisation Undoing Tax Abuse (Outa). (Lucky Nxumalo)
Wayne Duvenage is the chairman of the Organisation Undoing Tax Abuse (Outa). (Lucky Nxumalo)

THERE comes a time in every society’s evolution, when the tax authorities need to change their approach to trying to balance the books. 

The notion that a government must continuously increase taxes will receive heightened resistance when there is an overt display of inefficiency, wasteful expenditure and a lack of desire to meaningfully tackle corruption. 

Instead of attracting revenues, the unruly conduct by those in authority will drive revenue away, and their problems will get worse. 

Less is more when dealing with the trap our government is in.

The insatiable desire to seek new revenue streams and to pile on demands for more cash from an overloaded and shrinking tax base is a recipe for disaster, one which the SA Revenue Service (SARS) knows, but appears to ignore.

SA's thinly-stretched tax base is now resisting and fighting back. If Finance Minister Malusi Gigaba believes that hiking taxes in any form is the solution to his woes, he is mistaken and short-sighted.

To start in a new direction at times like these, Gigaba needs to stop looking for more from taxpayers and instead look to what government controls to plug the gaping holes in Treasury’s leaking bucket. 

The causes are straightforward and linked to inefficiencies within debt-laden state-owned entities, as well as numerous areas of gross maladministration and corruption within government departments. 

Tough decisions 

Leadership in times of adversity requires tough decisions, the kind that shake the tree of habitual conduct and set the country on a new path of prosperity and growth. 

Decisions such as privatising national airlines have been taken by many other countries and they are better off as a result. 

Government-run operations do not move at the slick, innovative and competitive pace that operators of complex business systems such as private airlines do. 

The only successful government-controlled airlines are those that have zero political meddling. SAA’s bailout demands on taxpayers will not abate and Mr Gigaba knows it.

So its time for him to make the tough decision and get rid of SAA.  

Many more SOE’s require the same attention, not least of all the bloated monolith that is Eskom, which is sucking over 400% more from the economy than it did a decade ago (R39bn in 2007 to over R200bn per annum in 2017), with no improvement in output.

So here’s Gigaba’s next tough decision: no to Nuclear Energy, especially when (a) green energy with its cheaper and more efficient options abounds, and (b) independent power production competitiveness will leave Eskom standing in the dust when it comes to future efficiencies, and (c) we simply can't afford it.

Truckloads of moral courage is required by Mr Gigaba, if he is to announce that SA's proposed nuclear build programme is not an option anymore.

But we all know he dare not upset Mr Putin with any direct announcements of that nature. 

Plans to reverse R25bn in medical aid benefits and grants from the tax base to Treasury’s coffers will have significant negative consequences for the bottom half of those on medical aid schemes.

The fallout will be painful and the negative consequences of more pressure on already-strained state medical facilities will be immense.

Not to mention possible legal challenges that should follow from the state's lack of consultation and evaluation of this action. 

Not a wise decision at all Mr Gigaba, don’t do it. 

Getting less 

South Africans are getting less in return for their tax input of yesteryear, a matter which should be laid squarely at President Zuma’s feet.

The poor are suffering the most as the quality of SA's education, healthcare, road and rail safety, public security and general social infrastructure worsen every year. 

What Gigaba and company need to do is go and fetch the money which lies strewn at Zuma's feet in wasteful government expenditure and corruption, before he seeks any more from the tax payer.  And they should then introduce effective efficiency processes that require less from the taxpayer and demand more from public servants.  

Combine this with meaningful and significant amendments to state policy that will attract investment and job creation, and his and our problems will be solved. 

His party, the ANC, may even win the next election.

Alas, it is unfortunate for South Africa that Mr Gigaba's lack of foresight, courage and general good sense will, predictably, fall short of the tough decisions he needs to take. 

* Wayne Duvenage is the chairperson of the Organisation Undoing Tax Abuse (OUTA).

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