New tax resistance threat to fragile SA


Thanks to the state’s handling of the lockdown, ours has become a country where the risk of rebellion has never been higher since democracy

South Africans — illicit cigarette smugglers, the ANC Women’s League and a smattering of EFF populists aside — may have been united in their delight at moving to a less restrictive level 2 lockdown this week, but that’s probably where the sense of national unity ends.

One of the harshest lockdowns in the world may have helped avoid a ghastly crush on hospitals, but it has left traumatic financial and social scars — and a country divided like never before.

It has birthed an unhealthy sense of us and them: ordinary South Africans versus rapacious political elites. This was illuminated starkly at the funeral of ANC stalwart Andrew Mlangeni, where not only did the politicians casually break their own rules on the number of participants at a funeral, but soldiers were photographed smoking — at a time when cigarettes were banned.

The response was predictable. When the Daily Sun interviewed people at a vibrant social gathering in the middle of the Joburg CBD afterwards, with alcohol in plentiful supply, they deemed it an act of rebellion against government hypocrisy. As one participant said: “They tell us to observe Covid-19 regulations and ban tobacco and alcohol sales, yet they smoke, drink and gather at funerals with more than 50 people.”

Thanks to the state’s handling of the lockdown, ours has become a country where the risk of rebellion has never been higher since democracy.

Last week, nonprofit Sakeliga released the finding of a new poll, in which 95% of respondents said the lockdown had reduced their willingness to pay tax. Six of 10 respondents said they’d even consider illegally withholding tax if it could end the lockdown quicker.

The social compact is precarious. As former SA Revenue Service executive Telita Snyckers wrote in the FM this week, the lockdown has given South Africans a “taste for insurgency — the danger of a tax revolt has never been greater”.

It means, says Sakeliga CEO Piet le Roux, that businesses are becoming “unusually motivated to decrease their tax payments”.

Le Roux’s argument — based on the poll — is that the corruption, mismanagement and harmful policies that accompanied the lockdown have created a “perfect storm” for tax morality in SA.

And it’s not just among individuals or small businesses. Le Roux says a senior executive at an “iconic” local company “considers paying tax in SA a possible violation of the American Foreign Corrupt Practices Act, since the money largely funds harm, mismanagement and corruption. While this interpretation is probably, legally speaking, incorrect, it is morally striking.”

It’s not hard to see why so many in the private sector — unlike public officials who suffered few salary reductions or job losses — feel so bitter. This is clear from the 61% of businesses that told Sakeliga they’d suffered big financial losses through the lockdown.

Now, the pandemic was always going to hurt incomes. But the way the state handled the lockdown — implementing rules without consultation, refusing to explain its decisions, and failing to crack down on corruption in its ranks — left a bitter taste.

Treating SA’s citizens — corporate and private — with such disdain, when they’re the ones who pay civil servants’ salaries, is a recipe for disaster. It’s not acceptable to keep the country in the dark over the science behind frightening Covid mortality models, nor to close ranks against tax-paying businesses when you’re likely to need their support now more than ever.

It’s unclear whether President Cyril Ramaphosa can mend this rift — but if he wants a shot at finding the money SA needs to survive, he’ll have to prioritise such a reconciliation.