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Calling for a tax revolt is immoral

Helen Zille, the previous leader of the Democratic Alliance, South Africa’s largest opposition party, provoked a social media storm when she threatened to initiate a “tax revolt” if the country’s corruption history wasn’t timely tackled. Paulina French investigates what this would mean for our society’s poorest and also the moral implications of such action, taking the Catholic Church’s social teaching into account.

It was so positive for South Africa, to have President Ramaphosa deliver a talk at the recent annual World Economic Forum in Davos. He portrayed a promising future for South Africa while there.

We are bombarded with so much that is negative, when it comes to our economy, corruption and the general state of our country that we tend to forget, as Ramaphosa stated in Davos, “that we celebrate 25 years of democracy” and that we are about to hold our “sixth democratic national election”. We take this for granted, especially If we look at other countries across the globe where processes such as these are either a pipedream or an idea that is widely repudiated.

At Davos, Ramaphosa spoke proudly of “Africa’s digital vision”. “We’ve got the skills, we’ve got the technology, we should now have the courage to be ahead of the curve […] Efforts to introduce a new era of accountability are taking hold. The state revenue service, a vital cog in the economy, is being stabilised.”

As much as this is forward thinking, it is also critical that those who have corruptly stolen resources which were meant to uplift the lives of the poorest be brought to book. It certainly seems that the president is ready to do this.

This Tuesday, 29 January 2019, addressing the Business Unity of South Africa Strategic Dialogue for a Transformed and Inclusive Economy, Ramaphosa called for corruption do be “dealt with harshly”. “This year should be the last in which South Africa is described as a country ripped apart by corruption.” He also stated that there must be accountability and assured us that his government will “make sure that happens without fail”.

The country’s leader was responding to a report issued by Transparency International on Monday, 28 January 2019, ranking South Africa among the most corrupt countries in the world and the ninth most corrupt in sub-Saharan Africa.

The ranking uses a scale of 0 to 100, where 0 is highly corrupt and 100 is least corrupt. In 2018, South Africa had a score of 43, down from 45 in 2017. According to Transparency International those countries that are ranked least corrupt tend also to protect democratic rights and values more.

But contrary to the above statements, we have recently heard the Premier of the Western Cape encouraging citizens to institute a “tax strike”, resorting to the battle-fields of Twitter to get her point across.

The statement in itself encourages anarchy and disregard for the laws of our country. It was not so much the statement that shocked me, because politicians are good at making statements that make no sense, but the fact that some very well educated people indicated their support for this action.

Nobody likes to pay taxes. We all feel hard done by when we realise what our income could be if we didn’t have to hand over a large portion of our earnings to the government.  The fact of the matter is that we live in a country where the inequality levels are among the highest in the world. And also, there are a number of people being supported through government funded programmes such as social grants that rely on the revenue collected through taxes paid by citizens and corporations.

We could argue that one of the reasons why there is such a large inequality gap is because of the continued corruption across our economy, particularly when it comes to State Owned Entities. A closer examination reveals that beyond the effects of corruption and poorly managed public services, which one must insist does not strictly fall into the definition of corruption, the problem is also historical and structural. Inequality was built into the apartheid system and, though we are celebrating 25 years of democracy this year, the idea that apartheid’s legacy of inequality is “no longer with us” is delusional.   

Calling for a tax strike continues to appeal to the middle class and elite in our society. The poor are not likely to be paying Personal Income Tax. Their contribution to the fiscus is through indirect taxation like VAT and the fuel levy. This means that the poor are the most likely to feel the impact of a tax strike as the price of daily consumer products skyrocket.  Still, they rely on their measly monthly government grants to just survive. If revenue into the fiscus deteriorates they will certainly feel the pangs of hunger quickest.

Revenue collections from companies and corporates make up 18% of total revenue collection for the fiscus. Collections from Personal Income Tax, that’s from individuals like you and me, make up 37% of the total collection and VAT collection makes up. A further 25% of the total collection. The balance of 20% is made up of other taxes such as Excise Duties, Estate Duty, etc.  The very practicality of implementing a tax revolt is ludicrous considering indirect taxes such as VAT. Think about it.  Are you going to tell the teller that you won’t pay the VAT on your groceries?

Commenting on the suggestion to boycott tax, Judge Davis, a serving judge of the High Court and the chairperson of the Davis Tax Committee, stated in an interview with PowerFM on Monday, 28 January 2019, said that “[i]t’s a disastrous way to go. The way to deal with this is for us to put more and more pressure on the relevant authorities and hope that the new national director of public prosecutions, Shamila Batohi, is going to expeditiously prosecute a whole range of people.”

I couldn’t agree more with Judge Davis. Encouraging a tax revolt would be like setting a dry grass field on fire having already doused it with petrol. One only has to look at the economic instability of Greece,  where the government has struggled for a long time to get citizens to pay their tax, to understand what irreparable harm could come from calling a tax revolt.   Once a country chooses to go down the route of low tax morale it is an uphill battle to make tax compliance the social norm again.

From a Catholic point of view, the call for a tax revolt seems at best misguided — at worst immoral. There seem to be cases where refusal to pay taxes, or a part of one’s tax, might be justified: where taxes are used to finance wars, enrich the arms industry, pay for repression of citizenry, among others. But as a general rule, Catholicism insists that taxes are in fact a means to promote greater equality among citizens through welfare, public health and education. In short taxes help to promote the notion of the common good.

The most sophisticated expression of this teaching is in the United States Catholic Bishops’ document Economic Justice for All, 1986, further suggests how taxation itself might be more just. First, it embraces the idea of progressive taxation: the wealthier you are, the more you can and therefore should pay. In contrast, sales and excise taxes are regressive because they hit those who least can afford them, the poor, harder than the middle classes and elites. In 1961 Saint John XXIII said that “[i]n a system of taxation based on justice and equity it is fundamental that the burdens be proportioned to the capacity of the people contributing.”.

Under the present circumstances, in a context where President Ramaphosa is firmly behind clearing out corruption in public life, the grounds for tax resistance seem more than a little unreasonable. It would seem that such action is an impatient attempt at railroading, through a kind of populist justice. At very least, one should let the law take its course and wait for justice to be done before resorting to such tactics. Even in an election year, where grandstanding becomes all too common.

Were it possible that tax resistance might be a reasonable option — for example if these corruption hearings were to collapse into a cover-up — such actions should still be weighed carefully, between achieving political goals on one hand and the dire consequences that might result, for the poor. It is both pragmatic politics and good moral theology to recognise that actions could have, hopefully unintended, consequences that might actually worsen rather than improve the situation.

Calling for a tax revolt is not going to help our country to move forward. Until we create the social norm that corruption and theft will not be tolerated, we will find that getting ahead of the curve will be but a dream. Without a solid — and hopefully growing — tax base to move society towards greater equality and prosperity, the persistence and even increase in inequality may intensify the culture of dependency and patronage that is the very core of corruption.

* The opinions expressed here by Spotlight.Africa contributors and editors are their own and not official statements of the Society of Jesus in South Africa or of the Catholic Church unless explicitly stated.