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Tax is a WE THE PEOPLE matter.

The edited version was published in the Sunday Times, 27 April 2025

 A simple search about the purpose of tax yields “to fund social and economic programmes, and to provide public goods and services, such as schools, universities, hospitals, clinics and roads, as well as defence and security. " Taxes make the Democratic order sovereign and functional. They represent the income side of the state revenue account. Embedded in the purpose of tax is the question of who has the ultimate authority to decide how to tax society. Our Constitution provides that this authority is derived. 

Firstly, the authority originates from the electoral mandate that our freely elected representatives receive from "we the people" when we cast our votes. Consequently, the public representatives serve at our pleasure for a five-year term and must account for and renew their mandate.


Secondly, the public representatives elect a State President who holds the executive authority of the republic. This arrangement means that the President serves at the pleasure of Parliament. A fifty-plus-one vote from the freely elected public representatives finalises the arrangement. 


Thirdly, the President exercises executive authority together with Cabinet members. The Minister of Finance is responsible for developing tax policy and overseeing the accountability of the tax regime. It is assumed that SARS is technically at the centre of raising and collecting revenue related to tax matters. 


With the origin of the authority clarified, it is essential to note that a primary majority of fifty-one per cent determines the extent to which the absolute power to govern can be exercised. In a reality where no party has more than a 50% majority, the authority to govern is institutionalised to be shared.


This constitutional facility is a direct result of the liberation struggle demanded by "we the people" that "no government can justly claim authority unless it is based on the will of all the people. " If the people's will dictates power sharing, no arrangement can change democracy's full impact. 


In this context, this rendition celebrates the reversal of the VAT increase. What is scary to imagine is what would have happened if the tax policy intent to increase VAT to 17% had found a party with a 50 %+ threshold to govern. The 0,5% compromise came later as threats of litigation and other mechanisms started to tilt the balance of forces in favour of reversal. This is a moment when the valid reasons why the RSA Constitution is hailed as one of the best in the world are as follows: 


This representation facility of "we the people " has been used, arguably for the first time since 1910, to question and stop the implementation of the fiscal framework. It is no longer a given that tax and budget decisions will be subjected to the technical correctness of the Church Square or, rather, Paul Kruger Square Consensus in Tshwane.  It has now shifted to the town halls, where we, the people, reign. 


Whatever spin doctoring will be made by political parties on this monumental victory against the arbitrary power to levy tax, and restore it to the realm of government of, by, and for the people, the victory to reverse the VAT increase belongs to the May 2024 outcomes. 


With all the discontent the May 2024 outcome carries, it has cracked a veil for "we the people" to have an enriched relationship with the democratic order we are so much a part of. What has not happened yet, and should be encouraged to happen, is to interrogate all similar revenue-raising decisions within the context of whose authority is being used to set thresholds, such as municipal property ratings, NERSA's electricity tariff determination, and other regulated pricing regimes. 


The retreat on VAT presents an opportunity for society to express itself and be vocal. This aligns with what our Constitution signifies when it establishes us as an open society. Our freely elected public representatives have taken three decades to unite in our interest. Now that they have, we must demand more from them to reshape the demographic consequences of budget decisions. The next budget should be approved only after it has addressed spatial per capita questions. 


The out-of-court settlement sought by the ANC, and supported by the DA, should concern us as a civil society. The issues raised in the affidavit are of such constitutional significance that it would have been prudent for the case to continue and establish case law for future reference. CUT!!

 

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