National 27.8.2016 08:34 am

South Africans won’t pay tax if it’s wasted, ombud warns

Judge Bernard Ngoepe

Judge Bernard Ngoepe

‘There is a view that state institutions are being used as political tools.’

If taxpayers get the impression that state institutions or those charged with the administration of their money conduct themselves unethically, the country will have problems, the Tax Ombud has warned.

“One of the problems we will have, will be that taxpayers will say ‘I will not pay if my money is not going to be used properly. I will not pay if my money is going to be corrupted. I will not pay if my money is going to be used to finance institutions, which are going to abuse their power for political gains’,” Judge Bernard Ngoepe cautioned at the 6th Annual Conference of the Fiduciary Institute of Southern Africa.

He said taxpayers would be encouraged to pay their taxes if they knew it was going to be used properly. That meant that the South African Revenue Service (Sars) during its collection efforts, but also state institutions and government had to make sure that it conducted itself ethically. It was not enough to argue that conduct was legal.

Ngoepe said if South Africa was not careful to emphasise the importance of ethical behaviour – not only of taxpayers but also of those charged with the responsibility of administering those funds – the country would face difficulties sooner rather than later.

“I almost thought that I shouldn’t come here… this morning following some events last night. I thought what is there to talk [about]… when there is a national topic… overshadowing everything.

“But then I thought that perhaps there is some connection between what I’m saying today and what happened or what was said last night on the news and that connection is that there would be a problem if people begin to think that state institutions behave without ethics, immoral, and like I’ve said earlier on in my paper there is a view that state institutions are being used as political tools.”

His comments come amid reports that actions taken by the Hawks against Finance Minister Pravin Gordhan are politically motivated, a contention denied by the presidency. Gordhan was requested to report to their offices on Thursday in order for a warning statement to be issued, but indicated that he would not do so. The investigation relates to the so-called “rogue unit” that was previously established within the South African Revenue Service (Sars).

Ngoepe referred to an assertion by EFF leader Julius Malema some time ago that Sars had a political motive to pursue him for outstanding taxes.

“The issue is not whether he was right or not. The real question that arises out of statements such as that is do we satisfy ourselves all the time in the way that we deal with things in the country that we conduct ourselves properly in a fair manner and in a manner that is always informed by and based on good ethics.”

Some of the reports it had received suggest that there is a lack of honesty on the part of some individual taxpayers and multinationals operating in Africa. However there seems to be a paradigm shift in large accounting and auditing firms to try and move away from exploiting loopholes in tax law.

“In my experience, a number of taxpayers are, rightly or wrongly, distrustful of at least some of the tax officials; sometimes they perceive them as being corrupt, malicious, and indeed vindictive and sometimes giving the impression that they are being used as political tools. Very often these negative perceptions afflict the entire system.”

Ngoepe said the knowledge that tax collections would be used properly and for the benefit of the people in general was crucial to the inculcation and nurturing of good ethics towards tax payment.

“Corrupt use of public funds, or their improper use, lessens the feeling of guilt on the part of evasive taxpayers, because they give all these ills as an excuse for not paying. No wonder the more corrupt government, the less tax is collected – a recipe for a failed state,” he said.

He, however, dismissed suggestions that South Africa has reached a point where taxpayers are actively engaging in a tax revolt.

“No, I don’t think we are at that point yet, thankfully.”

Gordhan appointed Ngoepe as the first Tax Ombud during his previous tenure as Minister of Finance. Ngoepe’s term comes to an end at the end of September. He previously indicated that he was open to serving another term.

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