South Africa may be on the verge of a tax revolt: SARS chief
South African taxpayers may start withholding their tax payments due to years of corruption.
This is according to new SARS commissioner Edward Kieswetter, who said that this withholding of funds may ultimately lead to an international bailout from an organisation like the IMF, reports Reuters.
Speaking at a tax conference on Monday (26 August), Kieswetter said that falling trust in the collector by individuals and companies had led to rising levels of tax avoidance and fraud, bleeding billions from government.
“When public trust wanes, as is the current case, then taxpayers feel morally justified to withhold or manipulate their taxes,” Kieswetter said.
“When revenue collection is undermined it traps us in a vicious cycle of revenue decline, as we’ve experienced, and consequently the need to go with begging bowls to borrow money, which effectively mortgages our future.”
IMF concerns are a wake-up call
Earlier this month, IMF officials said that South Africa has not approached the fund for a bailout and was still far from needing to do so,
However, some economists have indicated that the threat of a bailout may force South Africa’s government to push through the reforms it needs to rescue the economy.
An expanded bailout for struggling power utility Eskom and calls from other state companies for support have strained the nation’s budget, prompting business groups and analysts to warn the country could be pressed to ask the IMF to help keep a lid on ballooning debt.
“The IMF is used as a scare tactic to make the government aware that if we don’t implement the necessary policies, we may be forced to turn” to them, Thabi Leoka, an independent economist, said in an emailed response to Bloomberg.
“South Africa’s problems are not insurmountable. We know what we need to do. Our problem is the lack of implementation and political will.”
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