Case of debit experience, credit cash

Intaxicated can take many forms. It can range from the joy of receiving a tax refund or the natural resentment against paying taxes.

It can be the frustration of being caught up in a South African Revenue Service (SARS) dispute or being left comfortably numb from the 55% sin tax on getting intoxicated. But above all it is the fury one feels when confronted with blatant wasteful government expenditure and corruption.

Auditors were obviously never consulted when designing the administration systems of the new South Africa with nearly 300 metros and municipalities. This simply creates 300 more administration points, all with their attendant risks and systems of internal control that should combat such risk.

Taxes are collected at national level by SARS. This is one of the fundamental features of the SARS success story. One can only imagine the mischief that would have been created had South Africa adopted a provincial taxation system.

The revenue collected gets divided up by the “equity shares formula” that few understand. The cash flows down through the provincial budgets and a large component gets spent in by the 300 local authorities. That just creates 300 opportunity centres for wasteful expenditure and corruption.

In December, Buffalo City Metro, East London, disbursed close on R5.98m to operators for conveying passengers to local Mandela funeral functions, none more than 70km distant from East London.

I have had sight of the invoice paid. It is of such poor standard it should never have been accepted, even as a petty cash disbursement. Subsequent press investigations have calculated an average fare of R750 per passenger. Apparently more payments are being uncovered.

Will investigations ever lead to the funds being recovered? I doubt it. So it will be another case of debit experience, credit cash.

About 5.3-million out of 53-million South Africans pay personal income tax. The remainder pay indirect taxes. The primary problem remains, South Africa does not have enough taxpayers to support so many!

The message sent out by Buffalo City Metro shows that they have no regard for their responsibility to the taxpayer. And SARS and the Treasury can do nothing to compensate for the resultant intaxication.

Originally published in the Sunday Times: Money & Careers Tax Talk column.


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