The organization Business League says its latest poll indicates an explosion in business people’s willingness to pay further taxes due to the isolation period and corruption.
Business League says 99% of respondents in its poll indicated that they are now less willing to pay taxes. Nine out of ten indicated a tendency to defer their tax payments for as long as possible. Six out of ten would even consider withholding their taxes illegally if they were encouraged to do so and could end the isolation period earlier.
The poll is probably bad news for the government. The Minister of Finance, Tito Mboweni, said in June that the Covid-19 pandemic and consequent isolation caused a deficit of 15.7% in the gross domestic product (GDP) for South Africa, which resulted in a budget deficit of R761 billion. This is more than double the initial deficit of R370 billion that the government provided for before the outbreak of Covid-19 in South Africa.
Piet le Roux, CEO of Business League, says ʼn so-called new norm in terms of tax readiness is taking hold.
“The new normal for tax willingness will be much lower than before. We recommend that the government and analysts provide for this trend in their estimates of future fiscal deficits. Business people are becoming extraordinarily motivated to reduce their tax payments. ”
Le Roux says that, according to participants’ comments and given the state of the country, the isolation period, corruption, mismanagement and harmful government policies in general seem to have created the perfect storm.
A senior person at one of South Africa’s iconic companies recently told me that he considers the payment of taxes in South Africa as a possible violation of the US Foreign Corrupt Practices Act, as the money mainly finances crime, mismanagement and corruption. . Although his interpretation is probably legally incorrect, it is morally striking, ”says Le Roux.
“This is a moral dilemma that weighs increasingly heavily on business people in South Africa: They regard it as their moral duty to serve and finance matters of common interest, yet they increasingly regard taxes as harmful to society, given how it finances mismanagement, corruption and harmful policies. “
As many as 84% of pollsters believe the government is treating the Covid-19 outbreak badly, 14% could not decide and 2% indicated it was being handled well.
A total of 61% of businesses said they suffered large monetary losses, 29% suffered significant losses and 10% of respondents indicated that their income remained unchanged.
Most pollsters also rated the fairness of the government’s Covid-19 mitigation measures as poor.
