Expats close tax door on SA

Sars commissioner Edward Kieswetter. Picture: Moneyweb

Sars commissioner Edward Kieswetter. Picture: Moneyweb

Sars commissioner Edward Kieswetter says when public trust wanes, as is the current case, taxpayers feel morally justified to withhold or manipulate their taxes.

SA Revenue Service (Sars) commissioner Edward Kieswetter has admitted on a number of occasions that tax collection is under threat.

Treasury predicted back in February that there would a shortfall of R42.8bn in tax collections, R15.4bn more than the R27.4bn shortfall predicted last year.

Kieswetter has 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, 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.

“If Sars fails, our democracy fails,” he said.

Those are the chickens of the Jacob Zuma era coming home to roost.

But, those charged with formulating economic policy are not helping matters by forcing South Africans abroad into making the choice many have avoided – finally closing the door on their home.

A proposed new tax on expatriates – due to come into force next year – has seen thousands of those working abroad deciding to cancel their financial residence status so that they will not be affected by the new tax.

This also effectively means they are financially emigrating and may go the whole way in the future, particularly if they feel excluded from participating in the SA economy (as many do) and if they feel themselves as unwilling revenue milk cows.

Even at home, taxpayers may be avoiding tax as much as possible – cutting down on consumption of heavily taxed items is one way – or delaying payments.

Until taxpayers are convinced our money is going to be well spent – and not stolen – you will see the resistance continuing.

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