Is a tax revolt the answer?
TIPPING POINT: RELUCTANCE TO PAY A GOVT MIRED IN GRAFT ALLEGATIONS INCREASING
Ultimately, in a tax revolt, citizens bear the burden of disruption in government services, economic stagnation and inflationary pressures.
Tax revolts date back to biblical times. Throughout the ages they have exhibited similar symptoms of a decline in taxpayer morale and confidence in a government’s ability to manage public finances for the greater good of its citizens.
Recent public outcries in South Africa signalling dissatisfaction and concerns over the management of public finances suggest that the country could be on the brink of a tax revolution.
While taxpayers have a civic duty to be tax compliant, they are not donating taxes to be altruistic. There is an expectation of a return in some form. Recent events suggest that South Africans are becoming increasingly restive about paying taxes to a government mired in allegations of corruption.
The point at which compliance shifts to resistance
In a recently published paper, I reviewed some of the literature on tax compliance. My aim was to establish the theoretical point where tax compliance shifts to resistance.
I also extended my analysis to South Africa by extrapolating the legal implications of a tax revolt. The study found that the fine line between tax compliance and resistance lies where government creates equitable distribution between collective costs and benefits. Often the threat of a tax revolt is a measure to renegotiate the terms of fair exchange.
Reasons for revolt
South Africa’s current economic, political and social context presents many determinants of taxpayer resistance: a high tax burden; loss of confidence, credibility and competency in government; low taxpayer morale; and frustration at government’s lack of commitment to stop rampant corruption and misappropriation of tax funds.
But is a tax revolt the answer?
As a last resort, revoking one’s consent to tax and embarking on a full-scale tax revolt may seem like the only available option to restore the terms of the fiscal contract.
However, historical accounts of tax revolt show that this type of action can expose citizens to the harshest and most repressive measures.
A tax revolt is an act of civil disobedience and is unlawful
The mechanisms available to the SA Revenue Service to enforce tax collection are far reaching. They include seizure and execution of property. There are other consequences too. When taxpayers renege it can lead to severe fiscal stress and disruption in government services, economic stagnation and inflationary pressures.
Solutions
An important step is to ensure transparent governance is fostered so government can be held accountable for effective spending. This can be achieved by supporting civil society groups that challenge government policies and the spending of tax revenue. Trust in government institutions has to be restored. The starting point must be to address corruption, restore legitimacy in government and ensure value is received for tax money. Only then can government rebuild its credibility and taxpayer morale, and restore taxpayers’ consent to tax.
Roshelle Ramfol, senior lecturer, University of South Africa
This article is republished from Conversation
The