When taxpayers lose trust...

I’M NO longer sure how it happens in other parts of the world, but I’m sure of one thing:it is that we in South Africa have bad memories. Not only that, we’re also perennially bad at connecting the dots.

We rely on the media to keep events alive in the public eye in order to pay attention to them. Then we just move on as soon as other events take their place in media headlines. Each time we move on as new things come up, we neglect to make the links between past events and new ones.

This tendency only benefits people who have become adept at playing us. They steal from us and either issue lame apologies for their deliberate actions, or make promises to investigate themselves.

Often appeals are made to our spirit of forgiveness, peppered with a touch of ubuntu here and there and topped up with references to some archaic African traditions of respect that benefit only powerful men while keeping many rural communities respectfully, even obsequiously, African.

We always fall for the manipulative ruse.   

South Africa is broke and getting more so with each passing week. Instead of tax revenue from corporate South Africa and individual contributors going up year after year, like it used to during the times of Trevor Manuel and Pravin Gordhan at National Treasury and the South African Revenue Service (SARS), the downward spiral has continued unabated in recent years.

While the negative trend first accelerated in December 2015, following the ill-advised removal of former finance minister Nhlanhla Nene, and again in March 2017 in the immediate aftermath of the removal of Pravin Gordhan and Mcebisi Jonas, the slow descent began some eight years ago, following the arrival of Jacob Zuma in power.

Trust levels boost tax levels

Taxpayers all over the world regularly complain about the levels of tax they have to pay their respective governments. They do so because it’s hard to feign happiness whenever one calculates the difference between net salary and gross salary, or observes the gulf that sits between corporate income before tax and corporate income after tax.

But they also, often, understand why their governments have to collect tax. In countries where there are higher levels of government accountability and clearer visibility of where governments spend tax revenue, citizens play their part willingly. They accept this as a bitter, but necessary, pill to swallow.

They’re made part of transparent and fully consultative processes leading to the construction of public infrastructure that gets maintained, and they witness other crucial services being delivered to communities around their country.

They also know that their governments actively and consistently work at creating enabling environments for the upliftment of the poor through, among others, the establishment of small and big businesses to create jobs and stimulate economic activity.

Much of all of this used to also apply in South Africa during the Mandela and Mbeki years. South African taxpayers simply accepted their role in contributing to socio-economic development by ensuring that government had the required means to deliver.

Sadly, the days of blind trust in government are over.   

The long chain of events

The list of events we should be connecting hasn’t stopped growing. In it we find the hundreds of millions of rands in public funds illegally spent on Nkandla and the paltry refund Zuma was made to pay after years of playing hide and seek; the millions spent every year to keep the ever-dissatisfied Zulu king happy; the still unresolved sale of South Africa’s strategic fuels; billions lost through corruption and inept management at South African Airways, Eskom, Transnet, Department Of Water and Sanitation, other state-owned enterprises and various provincial and local governments; more billions paid to Gupta-linked consultancies - often without evidence of any work having been done - as well as to their mining and media businesses and several private sector enablers who have been exposed in recent weeks.

For all these diversions of public funds into places they were not intended to go, here and abroad, there has been massive opportunity costs for the country. Service delivery has been poor at municipal level across the country, household costs in electricity, water and living expenses have spiralled, and tertiary fees have become unaffordable for millions of South African students.   

However, the biggest cost to South Africa, one that will be hard to recover, is taxpayer trust. Recent reports, many of them confirmed in discussions at the recent Tax Indaba, show that confidence levels have plummeted dramatically in recent times.

In a Financial Mail editorial, Rob Rose wrote that “It’s understandable. In a world where the moral fibre of your president, finance chief and tax tsar are, let’s put it kindly, questionable, you can hardly hope for tax morality to be the one shining exception.”

He went on to quote SARS head of research Randall Carolissen as having reported the number of outstanding corporate tax returns to have jumped to 87%, while outstanding personal tax returns have risen to 77%. 

Given the soaring levels of impunity on the part of powerful politicians and those linked to them, as well as the arrogance that comes with knowing that no one can go after them in the current regime, none of us should feign surprise at the falling levels of confidence in the system by growing numbers of corporate and individual taxpayers.

Those who can, will either move their capital out of the country or hold on to it until there is a semblance of political and economic sanity at policy levels. There is nothing illegal about this. They will do all they can to avoid exposing their hard-earned money to an environment where it might be stolen by elements of the yet-to-be defined and legislated radical economic transformation agenda.

Recent reports of plans to take billions of rands from government employee pension funds managed by the PIC to burn them in SOEs still led by corrupt and incompetent political deployees are unlikely to help the situation.   

We should expect the downward spiral to continue for as long as the country continues to be ruled by men and women who should either be under active criminal investigation, or sitting behind bars. While all of this persists, the well-being of South Africa and her people will remain captive.

* Solly Moeng is brand reputation management adviser and CEO of strategic corporate communications consultancy DonValley. Views expressed are his own.

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