A Future Without Tax?


By Peter Meakin, SACPRIF

Would you pay a 20% higher lump sum of tax than you are currently, if SARS promised to fix it at that level for ever? Some would agree based on future earning potential, but employers and employees have different tax related costs, and each individual must consider their own prospects for future investment and/or higher earnings, including overtime prospects.
However, if you were asked to agree to a fixed lump sum tax of 20% less than you pay now, there would be a clamour. That is what is being touted by the South African Constitutional Property Rights Foundation (SACPRIF), who are challenging the constitutionality of the annual ±R670bn income taxes and VAT bills.
As SACPRIF’s executive chairperson and a property valuer by trade, I have calculated that 20% (±R136bn) of potential revenue for SARS has ‘gone missing’, because that is what vacant lands should now be contributing to the tax kitty, in the form of land rents. Frost and Sullivan, a multinational, has established that there are 27 million hectares of unused arable land in South Africa; that translates into a staggering 5 hectares per unemployed citizen, and countless urban plots. These would yield ±R136bn if the State substituted land rents, a rates and taxes surcharge, for income taxes and vat.
SACPRIF’s motivation is that it is irrational and unreasonable, and also illegal, to tax peoples’ earned salaries, wages, interest, profits, shopping and capital gains when it could target unearned land prices instead. That is a debate which goes back two thousand years, when some Pharisees were told in no uncertain terms to Render unto Caesar what belongs to Caesar… In my eyes, income taxes and VAT are robbery. If one makes and sells five shirts in a day, is there any difference if SARS takes two as taxes, or simply raids ones’ premises and takes them away?
Apart from the ethical and legal arguments, Hong Kong has shown that tax-havens work. In fifty years, their rag-tag Chinese settlers have become the fifth richest nation in the world according to the World Bank. Wherever it has been tried, low taxes and land prices have proved a panacaeia. If that was not true, why do our IDZs and SDZs offer 50% tax concessions?
So we propose charging much higher rentals for land that is lying unused or under-utilized. No tears need be shed for owners of said unused land, because there is no town-planning scheme in the world which allows disuse except for ecological or protected areas. Every plot should and must be used for agriculture, residential, commercial and other purposes. On its own this ‘stick’ will create jobs as owners look for ways to pay the higher rates. Alternatively, unused and unviable land will be abandoned. This is the ‘carrot’ which could tempt job seekers to settle for land in lieu of unwanted wage contracts. In Mozambique, the costs of land and capital are both very low and “peasants who had recently lived in mud huts, dependent on food hand outs from the West, are now building houses, driving four-by-fours and sending their children to school,” according to Douglas Roberts in a feature for the Sunday Telegraph. If they can do it, and turn unused land into commercially viable small-scale farms and other income-generating opportunities, surely so can we.

For more information and to support SACPRIF’s campaign, go to www.sacprif.org