CAPE TWON: Tax non compliance and the level of corruption in South Africa has again focused the attention on lifestyle audits for all officials responsible for high-level decision making in government.
The new Zimbabwean government announced that all public office holders, including cabinet ministers, will be subject to lifestyle audits in future to determine whether their income is aligned with their expenditure. The South African Revenue Service (Sars) is scandal-hit by the allegations against one of its most senior officials, Jonas Makwakwa. Media reports indicated that Makwakwa’s expenditure far exceeds his income at the revenue agency.
Makwakwa was suspended following pressure on Sars commissioner Tom Moyane after allegations by the Financial Intelligence Centre of money laundering and suspicious financial transactions in his private bank accounts. He was reinstated, despite continued investigations into allegations of contraventions of anti-corruption and tax laws.
Kris Dobie, manager of organisational ethics development at the Ethics Institute, says in a low trust environment such as the one in South Africa, the concept of lifestyle audits become more attractive. It adds another layer of transparency.
South Africa does not have a lack of transparency initiatives, however there is no accountability. President Jacob Zuma reportedly lashed out against the introduction of lifestyle audits for ANC officials following calls by his deputy, Cyril Ramaphosa, and former ANC secretary-general Gwede Mantashe in this regard. Companies enjoy the benefit of a tax deduction from their taxable income when they make cash contributions to these funds. Any interest earned on the cash in the trust is also tax free.
Treasury introduced a penalty regime in order to ensure that the tax benefit is used for its intended purpose. Williams also referred to the tax affairs of President Jacob Zuma and whether Sars is adopting the same approach to taxing Zuma as it did in assessing and taxing Julius Malema, leader of the EFF.
“Instead, Sars is able to hide behind taxpayer confidentiality, and seemingly fail to take legal action which it should be obliged to take.”
Dobie says for a democracy to work well politicians need to be accountable to the people. One may ask whether “blanket confidentiality” in all instances is desirable.
Tax confidentiality is aimed at protecting the privacy of information. This privacy of information can be infringed by a lifestyle audit or the disclosure of commercial interests by parliamentarians.
