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Tax often wasted, used against payers

Tuesday, February 25th, 2014

Taxpayers’ money is not only unnecessarily spent and often wasted on a large scale, but it is also increasingly used against them, the Solidarity Research Institute (SRI) said today. The SRI pointed this out in the run-up to Finance Minister Pravin Gordhan’s Budget Speech tomorrow. The 2014 Budget will be scoured for evidence of an aggravation of or alleviation of the tax burden.

Piet le Roux, senior economic researcher at the SRI, said the Auditor General uncovered unauthorised, irregular, fruitless and wasteful spending of R30,8 million in his latest consolidated general report. ‘This wasteful spending is merely the most obvious squandering of tax money. Although other government spending might technically not be irregular, it is nonetheless often inefficient. Taxpayers also have to foot the bill for corruption and poor service delivery. Since taxpayers then often have to pay a second time to receive the necessary services from the private sector, one could actually speak of double taxation. Another example is the number of senior staff in state and semi-state institutions that are either suspended or charged, and who then receive a golden handshake with taxpayers’ money. For instance, last year Phil Molefe, former head of the SABC’s news and actuality programmes, received a golden handshake of R2,4 million after being suspended by the broadcaster.’

Le Roux said it was even more concerning that government was using taxpayers’ money against them in malicious litigation. ‘A good example of this is the fact that government has already spent more than R5,2 million in legal costs after Solidarity took it to court for its illegal and unfair application of affirmative action. The courts have already repeatedly pointed out to government that its actions were erroneous. Government nonetheless continues to use taxpayers’ money against them. The government violates its own laws and then tries to justify its wrongdoing by using taxpayers’ money.’

Earlier, the SRI pointed out that Finance Minister Pravin Gordhan’s R7 billion personal income tax relief announcement in his 2013 Budget Speech did not constitute real relief (read more here). This, while almost the entire burden of the South African state rests on the shoulders of only a few million taxpayers (read morehere). The SRI revealed this information in light of the existence of 100 years’ of personal income tax in South Africa (read more here) and in the run-up to Gordhan’s Budget Speech on Wednesday.

Click here to view the official press release.

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