Johannesburg - Tax Ombudsman Judge Bernard Ngoepe has raised concerns over the apparent spat between Finance Minister Pravin Gordhan and the South African Revenue Service commissioner Tom Moyane.
Ngoepe warned that the apparent gulf between the two was not good for a healthy economy. He said the huge trade deficit, large unemployment number and people dependent on social grants were examples that the country needed all its agents to pull together to save the economy.
“We are becoming a corrupted society,” Ngoepe said. “Just because there is a mere absence of civil war in the country does not imply we are stable as a country.”
Ngoepe’s concerns come after Moyane said on Friday that relations with his boss Gordhan were strained. Moyane said some of Gordhan’s public comments had damaged the agency’s credibility as the long-running feud between the two escalated.
Ngoepe, the first South African ombudsman, made his comments on Sunday at an event hosted by the University of Stellenbosch’s Business School.
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On Wednesday, Gordhan said in his 2017 Budget proposals that new top personal income tax bracket of 45percent would be applicable for taxpayers with a taxable income above R1.5 million per year.
He said approximately 100000 taxpayers would be affected by the new bracket. Ngoepe said he was concerned that the increased bracket would not improve the culture of paying taxes in the country.
Forced to pay
“One of the basis for tax collection is that we are forced to pay it, but I think people should also feel morally obliged to pay tax. If we don’t spend tax prudently, then people will begin to justify their reluctance to pay tax,” he said.
“You never know in what form or way that reluctance will be expressed. Some people come up with very aggressive tax evasion schemes. We are losing billions and billions of rands of money going out of the country as well.”
Richard Carter, head of product development at Allan Gray, said this silent tax increase was worrisome.
Carter said the real loser from the Budget speech was the average South African taxpayer.
“While the increase in tax on the wealthy is the most eye-catching change, this will only impact around 100000 taxpayers. The real concern to me is that there has been little increase in tax brackets, leading to what is termed “bracket creep”. This is much steeper than the numbers that are grabbing the headlines.”