Is it right to pay tax when clean and safe hands are missing at the till?

Johannes Wessels (@johannesEOSA1)

SARS commissioner Edward Kieswetter’s biggest headache is not the gaping R300 billion crater in tax income this financial year or the growing Everest of assessed losses for companies that will impact negatively on CIT for years to come. His biggest problem is how to convince taxpayers to sustain a government that under the pretext of “a better life for all” has served up a toxic mix of corruption, wastage, mismanagement and anti-growth policies.

In addition, the very same government has doggedly pursued a lockdown strategy not underpinned by much logic that could yield any outcome other than a severe economic disaster with long term humanitarian effects. These effects include shortened lifespans, poverty related deaths, and deaths from medical conditions the government deemed non-essential. The toll of this inept strategy will in all likelihood dwarf the real Covid 19 death toll.

Lockdown has mowed down millions of jobs and several hundred thousand businesses. Those that survived have been severely crippled: they have a radically reduced income, have run up losses or have achieved less than half their previous taxable income.

One recalls the words of Saint Augustine, bishop of Hippo Regius in North Africa, whose theology and philosophy influenced ancient as well as modern thought: “Without justice, what are kingdoms but great bands of robbers?

Tax compliance in a lockdown context

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Sin tax to plug the hole in SARS coffer: the government laying the table for a Boston tea party?

Johannes Wessels
@johannesEOSA1

The prolonged lock-down has been a roaring success: not in enabling the public health system with “sufficient beds, ventilators and staff” for the inevitable “Covid-peak”, but in empowering organised crime syndicates.

Not only did the ban on the transportation and sale of liquor and cigarettes provide an unprecedented window of opportunity for already existing smuggling networks to strengthen their production and supply chain networks, they were wholeheartedly supported by the government to expand their client base exponentially.

The government by decree stopped the legal trade in liquor and cigarettes, effectively providing a protected oligopoly for the smuggling networks. Since there was no competition, they hiked their prices. That saw:

  • cigarette cartons that would cost around R450 before lock-down selling at anything between R1 500 to R2 000;
  • Gordons Gin selling at four times the pre-lockdown price, and
  • A litre red Robertson box-wine fetching R1 400, easily beating some of the prices achieved by top wines at the Nederburg Auction.

Patel hounded Dischem, but the smugglers, spazas & tenderpreneurs were the price hikers

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Business for Ending Lockdown (B4EL) rejects continued state of disaster

Business for Ending Lockdown (B4EL) notes President Ramaphosa’s announcement of a move to lockdown level 2 commencing 17 August. While the further relaxing of restrictions is an improvement compared to remaining at level 3, B4EL will not thank the government for giving back to the people of South Africa that which belongs to them.

B4EL is a campaign to completely end lockdown. The campaign was founded this week (The Enterprise Observatory of SA is one of the founding members). It is supported by several of the most well-known and largest business organisations, already counting almost 60 000 businesses. For more information, see www.endlockdown.co.za.

The president’s announcement only underscores the fact that the lockdown remains unnecessary, arbitrary, and, by the president’s own admission, fraught with corruption.

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The Vandals are governing

In his weekly letter from the president’s desk (13 April), pres. Ramaphosa lamented the vandalism that had caused the demolition of schools, describing it as “a great indictment of our society”. He pointed to the despicable implications: “When lock-down is lifted and learning resumes, thousands of our children will have no school to return to, depriving them of the right to education…”

The irony of his words is that the government is currently the vandal-in-chief. The damage done to schools in the president’s lament of four months ago is dwarfed into insignificance when compared to the destruction its lock-down strategy is inflicting on South Africans.

The sheer magnitude of their destruction boggles the mind. They have:

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Lock-down is international “worst practice” but Ramaphosa (and key business leaders) maintain it’s the solution

Day 132 after registering the first 100 Covid infections in SA made it clear how unsuccessful the lock-down has been: South Africa’s number of Covid infections/ 10 000 of the population despite the world’s harshest lock-down with a curfew, mandatory face masks and an alcohol ban passed that of a country that has never implemented lock-down, never made face masks mandatory and would have continued to buy South African wines were it not for the SA government that had banned the transport (and therefore export) of wine. (Figure 1)

Like that legendary village in Gaul ( home of Asterix and Obelix) held out against the might of Caesar’s Rome to maintain local culture, Sweden kept the constitutionally protected rights of its citizens intact (freedom to move, associate and work) whilst most of the world capitulated with lock-down measures before the might of fear brought about by flawed modelling of the Covid threat.

South Africa’s government early on sacrificed these rights, transforming its citizens to subjects, all “to ensure that the infection curve would be flattened to get ready for the Covid storm”. Figure 1 clearly shows how the curve was flattened, but today we know that it was not utilised to ensure Covid-ready hospitals with well-motivated staff serving sufficient beds in ICUs and care centres equipped with ventilators and required equipment.

The BBC had shown the world that the “flattening of the curve” was not used for that, at least not in the Eastern Cape.  The Minister of Health, Zweli Mkhize, however disputed the BBC findings, stating that, apart from the fact that the EC hospitals:

  • should follow medical waste protocols;
  • require more beds;
  • needed more nursing staff;
  • had to procure more ventilators, and
  • should get rid of blood on the floor and the rats,

the province was ready for the Covid crisis.

Easier to exterminate hospital rats than tender rats?

Mkhize made no mention that these problems were probably linked to the government’s continued feeding of the tender rats.

Quicker than what a minibus taxi can skip a traffic light, Andile Ramaphosa of Bosasa fame had convinced FNB to sponsor a R6 million contract to install Perspex shields and sanitise equipment in Gauteng taxis. He claims he is not personally benefiting from the contract awarded to SDI Force (an NGO).

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Betting on the “good ANC guys”: Building sand castles in an hourglass

Johannes Wessels
@johannesEOSA1

The perception of numerous commentators and business leaders that South Africans should mobilise behind president Cyril Ramaphosa, Pravin Gordhan and Tito Mboweni to support the “good guys” in the ANC to ensure an economic recovery, is not only simplistic: it is utterly naive.

It is also not new. It is a rehash of the theme of the 1970s when the National Party was assessed as comprising good guys (the verligtes) and bad guys (the verkramptes) with many commentators arguing the case to support the verligtes. The person who eventually took the quantum leap with a definite break with apartheid (F W de Klerk) was not counted amongst the verligtes. He was seen as rather conservative and a natural choice to chair the Ministerial Council for White “Own Affairs”.

Verlig-verkramp focused primarily on how Nationalist MPs were oriented on apartheid. That analysis had no eyes for another fundamental division: The PW Botha approach with the security structures of the military and national intelligence as key players versus those who preferred a civil-oriented approach with parliament in the fulcrum. De Klerk belonged to the latter faction. Botha and the securocrats had commenced talks and interaction with both Nelson Mandela (then in Pollsmoor) and the ANC in exile, but De Klerk was largely uninformed and excluded from these discussions.

Playing whilst the resource base is shrinking…

Verlig-verkramp was an insufficient perspective to detect the person who would make the decisive break with apartheid.

Now, many commentators and business leaders still cling to the hope for action and clear policy direction, contrary to what is happening in reality. The hope that “Ramaphosa knows what is required” is based on viewing the ANC as comprising a “good ANC” and a “bad ANC” and that the good guys will restore the country to a golden growth path. Treasury’s document on economic policy is clung to as a lifebuoy.

The good guys are supposedly led by Ramaphosa, Mboweni, Pravin Gordhan and Gwede Mantashe, with the bad guys represented by Ace Magashule, Faith Muthambi, Supra Mahumapelo and others.

This cowboys-and-crooks-perspective is naïve. It also fails on at least four grounds. 

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