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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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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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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The Scamdemic: Lock-down the bricks to raise the bed for the Covid-Tokoloshe

Johannes Wessels (@johannesEOSA1)

Like an infant caught red-handed when breaking a precious antique Grecian vase, the Ramaphosa government tries to escape accountability for the economic havoc caused by its lock-down strategy. It vehemently denies that that strategy has caused, and is continuing to cause, immense economic damage, joblessness, bankruptcy and hunger, blaming the naughty Covid-pandemon for toppling the “vase” (i.e. the economy) without government having a hand in the tragedy.

In child-like fashion it is spinning endless stories of how it miraculously prevented a larger tragedy by ensuring the vase did not fall on the Persian carpet.

Just in case that defence may not work, it also seeks safety in numbers, arguing every other country is in the same boat, having implemented lock-downs and suffering similar economic shrinkage. To make sure it will escape accountability, it also hides behind “scientific advice” that only they can see.

In the July 23 version of “my fellow South Africans”, the president said (t)he coronavirus pandemic continues to cause our economy great damage, threatening the viability of many businesses, leading to job losses and badly affecting the income of those that can least afford it.

And Nkosasana Dlamini-Zuma (National Council of Provinces, 23 June) stressed government was absolutely convinced the Covid pandemic” – and not the lock-down measures – was causing the economic damage.

This is not smoke and mirrors, it’s either a blatant lie, or an overwhelming manifestation of a lack of basic economic insight, or both. Here is the evidence.

If Covid harms the economy, pensioners must be the most productive group

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Covid 19: Folly to correct mistakes when heading the wrong way

Johannes Wessels (@johannesEOSA1) & Mike Schüssler (@mikeschussler)

When president Ramaphosa in his path-forward-to-lockdown-level-3-address-about-announcements-that-would-be-announced-when-central-command-will-be-ready-to-announce-these acknowledged some mistakes and promised that the government would rectify these, it invoked the fear of Russel Ackoff’s f-laws: correcting mistakes whilst pursuing the wrong strategy takes one further away from one’s goal.

Following a build-up of criticism that the severe lock-down was causing havoc to the economy with a GDP contraction in excess of 12% increasingly probable, Ramaphosa announced on 24 May the whole country would move on June 1 to Lock-down Level 3. 

The python of state control is still crushing our freedoms

Voila! Progress? The economy could now reboot. Rather déjà vu.

Instead of opening, the python of state control is not releasing its crushing coils around the economy and continues to squeeze the life out of our constitutional freedoms. Jogging on a beach or a family drive in a vehicle through the Kruger National Park is still considered as a far greater danger of spreading the virus than a church gathering of 50 people.

Marianne Merten’s assessment in the Daily Maverick

The management of the Covid 19-strategy has deteriorated to the level of a farcical comedy, comprising announcements by the president that are then (partially) revoked by members of cabinet.

Add the illogical utterances by Cele and Mbalula, the promotion of syndicate smuggling through prohibition measures on alcohol and cigarettes and the prescriptive diktats by Ebrahim Patel on what kind of clothing may be manufactured by textile factories and displayed and sold by stores, and it looks like another performance of the circus of incompetence.

True to form the new show revealed that the ban on cigarettes remains a key strategy in protecting the citizens from the voracious Covid 19 beast. Should the SAPS find at a roadblock (and Cele promised many of these) discover cigarettes, there will be problems: “if it is illegal to sell cigarettes, it is illegal to buy them“, he stated, adding that SAPS has the right to search for such invoices.

And whilst domestic air travel for business purposes appear to be allowed, the hotels or guest houses where business travellers would overnight, remain closed.

Is Covid 19 this government’s Vietnam?

No reshuffling of cabinet by the president, rather a confirmation of the collective nature of the decisions and more calls on the citizenry to obey the lock-down regulations and to persevere in unity that lives can be protected.   It reminds of the US leadership that had called for more commitment and perseverance whilst muddling on with the Vietnam war which they knew they could not win.

Is the government treating the citizens like mushrooms on “the Covid 19 pandemic” just as the US government had misled the American population about that war? 

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GDP shrinkage of 12%: It’s not the virus, but the lock-down, stupid!

Johannes Wessels (@johannesEOSA1) & Mike Schüssler (@mikeschussler)

At the end of the initial 3 weeks lock-down a GDP decline of about 5% was considered as quite a catastrophic outcome. Even at that level, it was considered worth the price since delaying the spread of the Covid 19 virus would give a window of opportunity for the health sector to get beds, ventilators and care protocols in place for the spike that would inevitably come.

The minister of trade and industry (dti), Ebrahim Patel, however dismissed the negative projections of economic shrinkage as mere “thumb-sucking”.

After prolonging the hard lock-down with just a gradual easing to level 4 to end May, the growing queues of the hungry waiting for food parcels, the increase in the claims from the unemployment insurance fund and the drastic shrinking of the state’s purse, would make a 5% decline in GDP a dream outcome.

The GDP figures for Q1 2020 will only be known end June. Data from other countries indicate that those whose governments had opted for a hard lock-down are in for excessive economic damage.

Change in GDP trend is the difference between growth in 2019 and 2020 1st quarters, implying that the Philippines that experienced a change of -6% went from 5.9% GDP growth in Q1 2019 to -0.1% in Q1 2020. This chart reveals the following:

  • Countries with a hard lock-down that kept only essential services and providers open, saw an average decline of 5,2% in GDP trend.
Continue reading “GDP shrinkage of 12%: It’s not the virus, but the lock-down, stupid!”