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When Taxpayers Lose Trust

Coen Van Wyk

Posted on December 16, 2018 11:55

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Taxes are needed for services to the community. But when tax payers begin to lose faith in the way their taxes are used, trouble looms.

It was a farmer in Uganda who said it best: “If the cow has too many ticks it cannot give enough milk. You have to pull the parasites off.” He was talking of taxes, not farming.
 
France in the late 18th century was one of the heaviest taxed states in Europe. Private individuals could purchase the right to act as fermiers-généraux, ‘tax farmers’, to collect taxes mostly from the third estate. High tax rates smothered the economy. The financial needs of war, the cost of luxuries for the nobility, the opulence of the King’s lifestyle led to the French Revolution.

Riding on this history the Gilets Jaunes (Yellow Vest) protests in France are now entering their sixth week. A demonstration against fuel taxes had become a general protest against increasing costs of living and decreasing pensions. Sitting in the most opulent office in the Elysee palace, President Macron bowed to the fuel tax request and promised to widen economic reforms to include the lower income earners.

Demonstration by the Yellow Vests. BBC


South Africans are protesting an electronic toll system that, they say, is tainted, open to corruption and inefficient. Government in 2013 authorized the National Roads Authority (SANRAL) to design an electronic toll system, E-toll, on the basis that “the user pays.” Road users just quietly ignored the tolls – less than 30% of vehicles pay their bills. By November 2018 the debt has grown to ZAR 40 billion (almost $3 billion USD).

Electronic Toll gantry. Avis. 

Despite protests by popular Premier David Makhura of the Gauteng province that e-tolls was a mistake, Government remains inflexible. Newly appointed Minister of Finance, highly respected Tito Mboweni, said in his introductory address that the public should stop ignoring their e-toll bills, because the country needs improved roads and nothing is for free. Government seems unable to understand that taxes on transport stifles the economy and further reduces tax income. 

There is a second whammy. Deterioration of State-funded railways are forcing transport into heavy road-damaging trucks. Maize farmers are increasingly unable to market their bumper crops internationally, given that road transport costs three times as much as rail transport. Other industries also increasingly rely on road transport for lack of cheap, dependable rail services, despite tax payers forking out cash while stories of corruption, inflated tenders for locomotives, and marital infidelity abound. 

Growing them is one thing, getting them to market another. Sibeko/Reuters


Taxes are an inevitable feature of modern governance. But when farmers see too many parasites on a cow, they know that the economy cannot produce growth.

SA President Ramaphosa with his tick-resistant Ankole cattle

 

Coen Van Wyk

Posted on December 16, 2018 11:55

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Source: Al Jazeera

Is corruption in South Africa perpetuating poaching?

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