JOHANNESBURG - Due to years of corruption, South African taxpayers may start withholding their tax payments, which could result in the country seeking an international bailout.
On Monday at the Tax conference, newly appointed South African Revenue Services (Sars) Commissioner Edward Kieswetter said that falling trust in the collector by individuals and companies resulted in increased levels of tax avoidance and fraud. He said this resulted in the government losing billions.
"The withholding of funds may ultimately lead to an international bailout from an organisation like the International Monetary Fund (IMF)," said Kieswetter.
He further added that when public trust wanes, such as in this current situation it results in taxpayers feeling morally justified to withhold or manipulate their taxes.
In an attempt to establish the degree of trust that South Africans have in public institutions, Sacs a marketing and consultancy specialising in national research studies conducted a survey to determine the credibility of these institutions.
Sacs strategic research director and spokesperson Reza Omar said the study was conducted on 1 300 South Africans who are 18 years and older, from across the country.
The research had revealed that there was a decline in trust for SARS between the first and second quarter of 2018, deteriorating from 62 percent to 55 percent, due to the revelations of state capture and maladministration at the Nugent Commission in early 2018.
Further research revealed that 56 percent of South Africans lost trust for SARS, this was around the time when former Sars commissioner Tom Moyane was dismissed from the institution.
Africa’s most industrialised economy has seen revenue collection fall sharply since 2015 due to the weak economic growth and inefficient administration.
Growth in trust improved in the first quarter of 2019 from 56 percent in the last quarter of 2018 to 59 percent in the first quarter of 2019, was likely caused by SARS’ announcement that it intended to investigate the tax evasion claims arising from the Zondo Commision into State Capture.
Additionally, there has been a 5 percent advancement over 12 months, 55 percent of people placed trust in SARS in the second quarter of 2018 compared to 60% in the quarter of 2019.
The appointment of Edward Kieswetter as SARS Commissioner in march also resulted in a growth of trust in the first quarter of 2019 to 59 percent, which advanced to 60 percent in the second quarter in 2019 as he settled into his position.
Overall, the second quarter of 2019 has proved that, 60% of South Africans somewhat still have trust in SARS as an institution, which is a development over a one-year period.
However despite the figures and research gather, the International Monetary Fund (IMF) stated that despite the country’s debt levels reaching “uncomfortable” levels, South Africa still hasn’t reached the point of requiring a bailout.
BUSINESS REPORT ONLINE