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Charles M Allan wrote (1) that taxes are not raised to finance government spending, even

though in some countries this may be the motive, (my emphasis) but rather for a government

to deliver social goods and to reduce the dependency on private sector investment.

The justification for any state to tax should be that the state has either contributed

infrastructure and facilities enabling the process of income production giving rise to the tax,

or that the country has contributed to the abilities of the taxpayer producing income or in the

alternative - a notion of social contract.

Effective taxation most obviously provides revenue and redistribution, ensuring states can deliver quality public services and infrastructure while curbing inequalities. (2)  

National Government and its functional equivalents throughout history have used the money

provided by taxation to carry out, or more probably in several instances failed to carry out,

many functions. Some of these include expenditures on economic infrastructure (roads,

public transportation, sanitation, public security, public education, public health systems),

military, scientific research & development, culture and the arts, public works, distribution, data collection and dissemination, public insurance, and the operation of government itself.

Over the years’ tax policies and the imposition of taxes have been developed primarily to

raise essential revenue with the purpose to address domestic economic and social concerns

in South Africa, but more specifically to act for the public good.

However, the Auditor- General report (3) on how the government spends the South African

taxpayers’ money, have identified 327 material irregularities since the inception of their

extended powers with an estimated financial loss of billions of tax money. The key issues of

which, across all levels of government, were characterised by accountability and service

delivery failures, poor governance, weak institutional capacity, and instability.

Clean audits continue to represent less than a fifth of the local government budget and the

Auditor–General’s message is clear, “Lack of internal controls and financial management

disciplines, deteriorating financial health and declining service delivery demonstrate the

pervasive absence of urgency and intention to change the audit outcomes.”

So, despite significant financial resources allocated and expended by municipalities on the

delivery of basic services, satisfactory service delivery remains a distant dream for most


The picture remains grim, as billions in taxpayer money are wasted, with little consequences.

Now is the time to hold the elected representatives accountable for the economy, efficiency

and effectiveness of service delivery by combatting instances of irregularities resulting from

fraud, theft, or breach of fiduciary duty.

Taxation is the price which we pay for civilization, for our social, civil and political

institutions, for the security of life and property, and without which, we must resort to the law

of force. (4)

BH Groenewald

The SGN Konsult Team

1 Charles M. Allan, Theory of Taxation, published by Penguin, 1971 as quoted by RC Williams, Income Tax in South Africa, Cases & Materials, Fourth Edition, @5 a reference work of tax principles and case law.

2. Taxing for a New Social Contract by Alex Cobham, March 2022, for the IMF

3 Auditor-General Integrated Annual Report 2021-22

4 Committee appointed by the governor of the State of Vermont USA, report in 1852


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