Govt's crisis of legitimacy fuels tax revolts - OUTA | Fin24
 
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Govt's crisis of legitimacy fuels tax revolts - OUTA

Mar 01 2017 14:07
Wayne Duvenage*

Cape Town - It is no secret that in the minds of many, South Africa’s government is suffering from a crisis of legitimacy. Granted, not all will agree, but sufficient numbers among those who read their payslips each month are questioning the return on investment of their tax deductions, which appear to feed a sick system of hidden agendas and dubious leadership conduct that condones mediocrity, waste and corruption.

The basic premise of societal order is driven by the public’s view of how a government conducts itself, within the premise of its own rules and laws. After all, it matters first and foremost that government demonstrate an impeccable adherence to the laws of the land, before it can expect its citizens to do the same.

This is the premise on which trust is built, the same trust that drives the success of a wide range of public policies that depend on behavioural responses from the public. The same trust that is necessary to increase the confidence of investors and consumers, and becomes essential for key economic activities.

While many bemoan the general notion of paying taxes, doing so however is the necessity of a binding social contract between the people and those elected to govern their nation’s affairs. This is the essence within which a structured and well-managed society should thrive.

But what happens when a government strays from that social contract and loses the trust of its tax-paying citizens? How does the taxpayer react to declining conditions of for example an ailing health system, and plummeting education outputs?

What should they do about a crumbling infrastructure or a putrid national broadcaster that no longer serves the interest of the people? How should society react to dubious contracts that largely benefit connected cronies?

Do the governing authorities expect the public to be immune to the rising wasteful expenditure and corruption within the state, and be content with rising costs of electricity, tolls, vehicle licences, TV licences, fuel levies and general taxes?

Aside from the capital and talent flight that emanates amid abusive government conduct, it is the fight that looms in the form of tax revolts by those who stay that is of greater concern. Tax revolts are generally regarded as unacceptable behaviour, but become justified for some when the end of their tether has been reached.

Some call it tax resistance. Others refer to it as civil disobedience. Whatever form it takes, a government gets less than it should or could, which in turn means higher taxes the following year - and so the downward spiral begins. 

Despite the general negative feeling associated with the payment of taxes, one shudders to think of what life would be like in a country where large-scale tax revolts or non-compliance runs rampant. But in reality, large-scale tax revolts don't happen. To do so would require the coordinated effort of big business who pays over the bulk of PAYE, VAT and company taxes. And let’s face it, big business has no appetite to cross swords with the tender arm that feeds them.

But that’s not where the retaliation to government’s abusive conduct lies. It lives within the hearts and minds of the general public, along with small, medium and some large businesses whose wealth and livelihood remains in South Africa.  

Society’s war against state capture

This is where society’s war against state capture, maladministration and corruption exists, with sizeable impact in those areas where the administration of taxes, tolls and levies are cumbersome and enforcement capacity is too weak or costly to stave off the onslaught of a wide-scale but focused tax revolt.  

Enabled in today’s world of free and instant media, moral courage begets and justifies civil action and disobedience in those areas where it feels right to stand up and counter the abuse, without even needing to challenge the general fabric of the national tax system.

A classic local example of a focused tax revolt is that of the e-toll scheme in Gauteng. The laws may be in place, but is the scheme legally justified? Not so in the case of e-tolls, as a result of the authorities’ lack of due processes when introducing the scheme, along with other factors which have justified the onslaught of a massive civil disobedience campaign.

Another focused public tax revolt under way in South Africa today is that against TV licences. The reality here is that the TV licence is a justified tax and one that should be paid. The laws and acts that govern this are sound. But sadly, these laws have begun to suffer from a crisis of legitimacy, emanating from the public’s declining respect for the government-controlled South African Broadcasting Corporation (SABC).

The moral courage driving a revolt against the TV tax appears to be fuelled by the outcomes of a recent parliamentary inquiry into the conduct of the SABC’s leadership. Adding more fuel to this fire are reports of how the TV licence debt collection contract was dubiously assigned to Lorna Vision - a company which is not licensed as a debt collector and has in its ranks a director with business links to the infamous Gupta family.

In reality, the TV licence is a small amount to pay for many, but momentous in principle. Just as the bicycle or dog licences of yesteryear were scrapped, our children will one day say “really, you had to get a licence to watch your TV?”.

A recent judgment against the Road Traffic Infringement Agency (RTIA) and the metro authorities within Johannesburg and Tshwane has now led to another tax revolt, one which has seen the rightful withholding of payment of traffic fines. While traffic fines are not strictly speaking a tax, the revenue stream from traffic violations income has become a sizeable portion within the financial budgets of many a local authorities.

Sadly, road safety matters - the real intention of traffic violation management - have taken a back seat, while revenue generation became top of mind when it came to traffic fines. So after the RTIA’s application of their processes were tested and found wanting in court, the public can be forgiven if their level of anger rises and the low percentage that do pay their traffic fine ‘taxes’ in Johannesburg changes their mind to stop doing so.

When a government and its agencies decide to wage a war of mass litigation against its citizens to try and recover menial debts, it has lost the plot of meaningful and effective governance. Worse is when that war is waged to keep revenues flowing - even if minimal - to connected people and organisations who are enriched at the expense of society. 

It is at this stage of the cycle that the legitimacy of government’s tax policies declines to a point of no return, and eventually collapses. This is the sad reality of the e-toll saga today, and where the TV licence matter will probably be in the near future - for both of these focused taxes could and should have existed and thrived long into the future, generating significant benefits for governance and society at large. Government’s crisis of legitimacy has largely decided their fate.

Such is the nature of focused tax revolts which are essentially “wrongful” conduct today, yet become socially justified actions which shape the laws of tomorrow. 

* Wayne Duvenage is chairperson of the Organisation Undoing Tax Abuse. Opinions expressed are his own.

outa  |  wayne duvenage  |  tolls  |  opinion  |  tax
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