Matthew Lester: I cannot see a tax revolt in SA. Here’s why.

By Matthew Lester

2015 is going to be a tough year in tax. And its not only about who is going to pay the additional R15 billion required to contain the national debt trajectory.

In October 2014 Finance Minister Nene estimated that RSA could contain the National Debt trajectory by splitting the estimated R30 billion public debt reduction for 2015 between the taxpayer and reducing state expenditure. But please remember that this is the estimate for 2015/16 only. More will be required for 2016/17. Unless the economy makes that biggest comeback since Lazarus, that is.

But the crucial issue is ‘ will R15 billion from the taxpayer be enough?’ And that’s dependent on tax collections for the festive season. Did SARS get a decent 13th cheque from PAYE deductions on Christmas bonuses? And did the consumer come out to play? That answer will only be known to SARS at the end of January.

All this is an annual concern and we wont know the answers until Budget Day, 25 February. Certainly this years Budget Speech promises to be a lot more controversial stuff than the pedestrian performances since 2009.

Matthew Lester: Rhodes Business School professor, tax and financial planning specialist

Speculation surrounds the BEPS reports (that’s Base Erosion and Profit Shifting). The Davis Tax Committee has recently issued a report on BEPS in RSA and some are speculating some new excitement. But lets put BEPS in perspective.

Africa started the BEPS debate being tired of multinationals ripping taxable profits out of Africa with transfer pricing arrangements with low tax jurisdictions. There’s no news in that.

But in the aftermath of the financial crisis politicians the world over needed a scapegoat on which to blame dwindling tax collections. So blaming it all on corporate tax cheats became a very convenient initiative to deflect political criticism. Nothing works better than attacking Starbucks, Apple and other big brands.

But internationally corporate tax collections are about 10% of total tax collections. So even if the BEPS project is a magnificent success it wont make a huge difference.

The drop in the oil price will do far more to restore the world economy. Now that’s what I call an international stimulus package. If it can be maintained.

Pravin Gordhan served 15 years as SARS commissioner and minister of finance. If the president thought he could simply redeploy PG without upheaval in SARS and national treasury he must have be naive. And the shakeup certainly started in 2014 and will continue into 2015 and possibly beyond. In the absence of Pistorius and Dewani this will attract much attention in the media. And rumours will abound.

There is already speculation of a tax revolt in RSA. There is certainly much taxpayer unhappiness. But perhaps this is more associated with wasted government expenditure than the tax collection function. But a revolt? You must be bonkers!

There are around 500 companies in RSA with taxable income exceeding R100 million per annum. They pay about 70% of RSA’s corporate tax.

35% of RSA’s tax comprises personal income tax, mostly collected from major employers.

Just 7% of VAT vendors collect 75% of the VAT.

So now if there was to be an effective tax revolt in RSA the big companies would have to play a major part. Ja, Right! Mr. CEO is going to make a public stand against tax. And get arrested in the process. I don’t think so.

I just don’t know what it will take to get South Africa’s top politicians to see the light on wasted public expenditure. And the brief of the Davis Tax Committee does not extend to the subject.

Sorry, I don’t have the answers.

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