Wayne Duvenage: Tax non-compliance and e-toll revolt is government-induced
Far too often government has displayed a flippant or nonchalant attitude towards the need for sound and rational policy-making, believing that citizens must simply accept and be compliant with irrational and often unworkable policies and processes.
Over the past two weeks, activity around the e-toll saga has reached new heights, triggered this time by a comment during Finance Minister Tito Mboweni’s recent Mid-Term Budget Speech that eTolls must be paid. Then a week later on Friday 2 November, Head of Tax and Financial Sector Policy at The National Treasury Ismail Momoniat suggested that the Organisation Undoing Tax Abuse (Outa) was impacting on tax morality through its anti-e-toll campaign.
The real issue, however, lies in another comment made in the same article by Mr Momoniat, which carries far more weight than government cares to pay attention to: His acknowledgement of “judgment calls made by Sanral on the e-toll project being questionable”. He follows this up by saying there has been no evidence to suggest that Sanral has been corrupt in its administration, as if to imply that policies may be dubious or unjust, so long as there was no corruption linked to their implementation.
And that’s where it has all gone wrong. Far too often government has displayed a flippant or nonchalant attitude towards the need for sound and rational policy-making, believing that citizens must simply accept and be compliant with irrational and often unworkable policies and processes.
The anti-e-toll position occupied by Outa, and similarly hundreds of thousands of Gauteng motorists, was never based on a view that the scheme was corrupt (there was, however, clear construction collusion and questions of Sanral’s conduct on the freeway pricing). Instead it was the issue of seriously flawed decisions and “questionable judgement” about the policy that had everything to do with the public defiance campaign.
Declining tax morality more often than not is due to government’s ignorance of its role and conduct that gives rise to the problem.
In the case of the e-toll decision, these “errors of judgement” by government and its state-owned entity Sanral were so substantive that whether an organisation such as Outa existed or not, eTolling in Gauteng was always going to fail over time.
Government punts eTolls as a user-pays scheme, as if it is the only mechanism it has or ever used to build public infrastructure. What it overlooks are a few basic fundamentals to be in place in order to achieve public compliance, the following few being central to Outa’s position:
Respect for the very users required to participate in government’s scheme. By ignoring the constitutional rights for meaningful consultation and engagement with the public, their rights and ability to influence the decision were ignored, and this has a tendency to make them angry. I can assure Mboweni and Momoniat that given the chance, the public would have provided rich input for consideration and positive influencing of Gauteng’s urban congestion. But that opportunity was robbed of them by Sanral’s shocking attitude.
Government’s policies must be administratively efficient, user-friendly and practical to apply. Unfortunately for Sanral their scheme relied heavily on information from the inaccurate eNatis (vehicle ownership registry) system. The e-toll system also relied on efficient postal services and a sound, incorruptible enforcement process. The picture of certain failure gets clearer.
Aside from those who are legitimately granted free services, all users must pay for a user-pays scheme and non-compliance must be easily enforced and administered. In the case of eTolls, a sizeable number of road users were always going to get away with non-payment. The inability and high cost of chasing the non-compliant users was always going to be prohibitive. International research on eTolls shows that when compliance levels drop below 80% it becomes too costly to chase up payment from the 20% non-compliant road users. Sanral never achieved over 40% compliance throughout the first five years of operation.
The e-toll scheme was so flawed that even those who received “free passage”, such as the taxi industry, refused to get an eTag in order to access the zero-rated tariff. In addition, people with physical disabilities who were granted free passage on e-toll routes were also unable to practically participate.
New tax policies and levies need to be rational and justified, followed by efficiencies in administration, collection and enforcement, if they are to garner the support and compliance of the people. No one enjoys living in a society where the rules are not applied consistently. Adding insult to injustice are the vast amounts of hard-earned taxes being squandered by corrupt and inefficient government officials and entities. This motivates even ardent law-abiding citizens to seek ways to buck the system, tackling the weaker taxes such as TV licences and e-tolls, followed by other taxes where the savings are higher.
It may interest Mr Momoniat and others in Treasury that Outa received hundreds of calls to start a tax revolt, especially during the height of Zuma’s plundering. Yet we took a responsible position and spoke out against the notion of a tax revolt. It was Outa that encouraged those not paying TV licences to do so once the new SABC board was appointed and Hlaudi Motsoeneng had left the building. It was Outa that posted opinions to encourage heightened tax morality once President Cyril Ramaphosa was appointed and again when Tom Moyane was suspended.
Government needs to stop shooting itself in the foot when it comes to driving a culture of tax morality. Complying with meaningful engagement on matters that impact the public is a good start. It also helps to not position civil society as the enemy when it criticises Government policies and processes.
Government should also stop giving in to political meddling when trying to enforce compliance on dysfunctional municipalities. The law is clear that government grants for municipalities are applicable only when financial hygiene and regulatory compliance is adhered to.
Yet Treasury and government leadership succumbs to political pressure and feeds the non-compliant monster that municipalities have now become.
The same plight has befallen Eskom, which is no longer taken seriously and is now unable to cut electricity supply to delinquent municipalities.
By allowing politicians to meddle with administration and run roughshod over laws, it is government and not civil society that has stimulated a culture of non-payment. DM