So, recently it has been argued that the state had reached the upper limit of how much it can increase the tax rate. Even a year ago, BusinessTech had stated that the limit of the extra amount of tax revenue that can be generated from further tax increases has been reached. In light of this, SARS have reported an expected revenue shortfall of R27,4 billion for 2018/2019. This article will discuss the role of taxation, why consumers might be more unwilling to pay tax, and what the state can do to ensure a higher tax return without increasing tax rates. Taxes are an inherent part of the social contract signed between the ruler and the ruled. In a democracy, like South Africa’s, the state rules over people through the consent of the people, granted to the state through the ballot box. Similarly, there is an implicit understanding that taxes function as payment for services rendered by the state. These services include healthcare, education, security and the maintenance of transport and energy infrastructure. When the people are unhappy with the services they receive, they might become more unwilling to bear their share of the cost burden. This becomes especially true when taxpayers perceive themselves to gain nothing from paying their taxes. They pay taxes to subsidize healthcare. Yet healthcare is so unreliable that they must pay up for medical aid as well. They pay taxes to subsidize education, yet South Africa’s education system is so bad that they have to fork out money to send their children to old model-C or private schools. They pay taxes for the state to provide them with security. Yet they have to pay extra to live in a gated community and hire private security companies, because the police seem wholly unable to keep them safe. They pay fuel levies to drive on roads that aren’t maintained and pay taxes to fund electricity infrastructure, while living under the fear of load shedding. In essence, some consumers have to pay twice for all the services that are supposed to be provided to them by the state. If private firms could service them more efficiently, why is there a need for them to pay taxes at all, if the services that are supposed to be rendered to them are absent? This is the core of the problem. For many, taxation in South Africa is a form of coercion and theft, since they must pay extra for the services they are supposed to be granted in any case. Anecdotally, I can confirm that many taxpayers proclaim that they would be happy to pay taxes if they thought it would contribute to improving the services it is supposed to provide. Persons who are coerced to pay taxes against their own financial best interest are more likely to exploit any existing loopholes and partake in tax boycotts. If the state wishes to acquire more tax revenue, they can no longer increase the tax rate. The upper bound of extra income that can be gained through increasing tax rates has been reached. Instead, the state should start holding up their end of the bargain. Significant improvements in the services that are supposed to be rendered are required. Tangible metrics can be used. If crime rates decrease and convictions increase, then trust in the police will increase. If electricity supply is more stable, then the large bail-outs Eskom require every so often might seem a bit more justified. If our education system can rank better internationally than it currently does, if tax money goes towards improving the country, then people might be more inclined to pay the taxes that the state is due. And it cannot be argued that the state requires more taxes to improve these standards. Education and healthcare, two of the worst performing sectors, make up the largest and second largest part of the state’s budget. Trust needs to be regained in these sectors before consumers will be willing to pay more taxes to fund it.