Mounting tax-boycott threat triggered by graft, rising taxes could bring down the government – IRR

3 March 2021

In a memorandum delivered to the Presidency this morning, the IRR warns that the government is facing a near inevitable tax and investment boycott if it does not rein in graft and act on policy reforms.

The document reveals that:

- The government’s financial position is virtually unsalvageable;

- Tax levels have reached a record all time high point when receipts are read against the size of the economy;

- The budget deficit is on a par with depths recorded on only three previous occasions – the First and Second World Wars and the collapse of the apartheid economy in the late 1980s;

- Fixed investment levels have plummeted relative to the highs recorded under Thabo Mbeki and are not set to recover given current policies and the scourge of corruption;

- Increases in broader taxation that include threats of prescription, wealth taxes, BEE compliance costs, carbon taxes, sugar taxes, tolls, levies, electricity price hikes, and EWC (the ultimate form of taxation) are strangling households and driving innovation out of the country; and

A de facto tax and investment rebellion is brewing that has the potential to bring down the government.

According to the IRR, these conditions arise from what is best described as rising levels of ‘citizen abuse’, which is what happens when a government acts against the best interests of its people. The IRR warns the government that should such abuse persist, and trigger a tax revolt, the effect could be to bring down the government.

The IRR further warns that, while it is unlikely that such a tax revolt will employ unlawful means but rather be pursued through a number of lawful avenues of rebellion open to citizens, the effect would be to force the state out of revenue-loop streams.

You can learn more here about the IRR’s analysis, and here about its efforts to #StopCitizenAbuse.

Issued by Gabriel Crouse, IRR writer and analyst, 3 March 2021