Khaya Sithole | A shot in the arm for SARS, a breather for taxpayers

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Khaya Sithole (Supplied)
Khaya Sithole (Supplied)

In a rather surprising twist, Mboweni and his team abandoned the course mooted in October and actually offered tax relief, says Khaya Sithole. 

Forty years ago, Ronald Reagan moved into the White House as the new president of the US. Before then, as a Republican candidate seeking to unseat Democrat Jimmy Carter, Reagan didn't have much going in the way of an appealing message until June 1980 when a little-known theory formed the centrepiece of his campaign. Six years earlier, in 1974, at the Two Continents restaurant in Washington,  DC, Arthur Laffer had sat down to dinner with two Republican staffers in the Gerald Ford administration – Donald Rumsfeld and Dick Cheney.

In seeking to explain how tax rates related to government revenue, Laffer had drawn a graph on a napkin that theorised that if governments taxed people in full, no one would work and no taxes would be raised. Similarly, if government taxed no one at all, then no taxes would be raised. In Laffer's view, the government of the day needed to find the right level of taxation that did not discourage people from working.

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