OPINION | Know your enemy, Minister Mboweni - don't make the innocent plug the tax gap

2020-02-22 08:15 - Yusuf Abramjee, Andy Mashaile and Makali Lepholisa
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Minister Mboweni, we do not envy the job you have in delivering the Budget. Record unemployment, a stagnant economy and the growing prospect of a ratings downgrade: could the scenario be any worse?

We at Tax Justice South Africa believe it could be much, much worse if your government does not do more to tackle one of the main reasons for all three of these stark realities, namely illegal trade. Dealing in smuggled goods robs SA workers of jobs, adding to unemployment.

Illicit sales steal taxes from the state, dragging the national economy downwards. And our increasing reputation for corruption and lawless business practices scares off foreign investors and justifies the pessimism of the ratings agencies.

You have the power to reverse this tide.

Auditors Deloitte predict you will announce that the tax gap – the difference between taxes that should be paid and taxes that are collected – is now more than R50 billion a year.

We urge you to call out those responsible for the lion’s share of that gap: the criminals engaging in illegal trade, money laundering and tax evasion. They are growing fabulously rich, and often hiding their ill-gotten gains abroad, by stealing money that is meant to build a better South Africa for all.

Law-abiding citizens deserve reforms that ensure these crooks are caught and locked up. Decent taxpayers expect the stolen billions to be recovered and used to help those who so desperately need it.

For too long, criminal kingpins crippling our nation have gone unpunished, as honest workers struggle to make ends meet. Don’t let your Budget perpetuate this evil.

You may be tempted to raise money by increasing the duty on legally sold products such as alcohol, fuel or tobacco in a bid to plug the tax gap.

But that only incentivises illegal trade. More buyers are priced out of the legal market, meaning bigger profits for the crooks.

You need to know your enemies. You need to punish them, not reward them.

Crack down on the tax crooks. Stamp out tax crime. It will be better for your budget, for the economy and for all hard-working South Africans.

Yusuf Abramjee, Andy Mashaile and Makali Lepholisa are the directors of Tax Justice South Africa. Views expressed are their own.