Who is fooling who?

Who will foot the bill for government’s extravagance when SA’s taxpayers leave to pay tax in countries that appreciate their efforts? It’s something Gordhan and his sidekicks need to bear in mind.

In his recent Budget Speech, Minister of Finance Pravin Gordhan praised the ANC and the ‘achievements’ of the past 100 years. In doing so, he snubbed those of the average hard working South African taxpayer and all the employers who put food on the table of their employees during this time. The minister then went on to mention that some of the country’s tax practitioners have outstanding taxes and returns.

However, if he was looking for errant taxpayers he surely didn’t have to look very much further than some of the honourable members right there in the house. Education isn’t a luxury, but a necessity, according to Gordhan. In practice, though, child support grants and rampant procreation result in taxpayers who plan for smaller families footing the bill for those who don’t. This doesn’t seem fair to me. If some regarded the Budget Speech as ‘upbeat’, this wasn’t a sentiment shared by rating agency Fitch.

It recently downgraded the investment outlook for SA from ‘stable’ to ‘negative’. Investors are aware that not all is as it should be, especially when it comes to mining rights. A proposed resource rental tax of 50% is enough to give them cold feet. The average taxpayer is pulling a heavy load at this time. Only government ministers have the luxury of an open chequebook when it comes to international flights and luxury accommodation. Cash is in short supply.

Footing the bill
South Africans are footing the bill for a government that cannot live within its means and this bill isn’t getting smaller. The minister mentioned budget deficits for this year and for next. The borrowed money will have to be repaid long after the pleasure of the international flights and luxury accommodation are forgotten.

A third of the tax revenue will be spent on the ‘social wage’, comprising child support grants and the like. In his speech Gordhan also forgot to thank the SA farming community for remaining on the land despite the high incidence of farm murders which, according to Genocide Watch, make farming in SA one of the most dangerous occupations, statistically, in the world. In addition, Gordhan forgot to thank farmers for contributing 2,5% to the gross domestic product of the country in an environment where state support and interventions for commercial farmers are almost non-existent by world standards.

Sidelined
I submit that Gordhan should take note that many of South Africa’s taxpayers aren’t members of the ruling party. These are the people who keep his government afloat. I think they’re getting fed up with being sidelined and taken for granted. If he wants to continue milking them with higher taxes and toll fees, he should bear in mind that once they’ve gone off to pay tax in countries that appreciate their efforts, he’ll have to find another source of income to pay for international airline tickets and social wages.

Peter O’Halloran is head of tax at BDO, Gaborone. Contact him on 00267 390 2779 or at [email protected]. Please state ‘Tax’ in the subject line of your email.