The government faces a probable tax and investment boycott if it does not rein in graft and act on policy reforms, the Institute of Race Relations (IRR) has warned in a memorandum delivered to the Presidency yesterday.
South Africans are facing what amounts to ‘citizen abuse’, which ‘is what happens when a government acts against the best interests of its people’, the memorandum says.
In a statement coinciding with the delivery of the memorandum, the IRR warns the government that ‘should such abuse persist, and trigger a tax revolt, the effect could be to bring down the government’.
The memorandum (published in the Daily Friend today) points out that:
- The government’s financial position is virtually unsalvageable;
- Tax levels have reached a record all-time high point when receipts are read against the size of the economy;
- The budget deficit is on a par with depths recorded on only three previous occasions – the First and Second World Wars and the collapse of the apartheid economy in the late 1980s;
- Fixed investment levels have plummeted relative to the highs recorded under Thabo Mbeki and are not set to recover given current policies and the scourge of corruption;
- Increases in broader taxation that include threats of prescription, wealth taxes, BEE compliance costs, carbon taxes, sugar taxes, tolls, levies, electricity price hikes, and EWC (the ultimate form of taxation) are strangling households and driving innovation out of the country; and
- A de facto tax and investment rebellion is brewing that has the potential to bring down the government.
The IRR points out that, while it is unlikely that such a tax revolt ‘will employ unlawful means but rather be pursued through a number of lawful avenues of rebellion open to citizens, the effect would be to force the state out of revenue-loop streams’.
IRR CEO Frans Cronje examined the scale of citizen abuse in South Africa in the Daily Friend earlier this week.