Paying tax: A moral and statutory obligation physicist Albert Einstein apparently quipped: “The hardest thing in the world to understand is income tax”.  So you are in good company if you sigh just by the thought of tax!  The Beatles put music to their thoughts and had a hit with the song “The Taxman” in 1966: “Let me tell you how it will be, there’s one for you, nineteen for me, cause I’m the Taxman”.

SARS “touching lives” campaign features stories of how taxpayers’ money is touching the lives of ordinary people and uplifting them to do extraordinary things. The impossible becomes possible – all because people pay their taxes.

The 2012 slogan “Get ready to be good at tax” has a nice ring to it and reflects the belief that as citizens we are bound by a social contract to pay tax and contribute to service delivery and development. Surely we are all morally bound to pay tax?


Morality is generally defined as “a particular system of values and principles of conduct”. It is therefore indicative of what an individual, group or a society regards as right behaviour. This definition implies a choice on the part of the individual or group.

In contrast a statutory obligation is something we have to conform with. You have no choice in the matter. If an individual or group decides not to conform to a particular statute or regulation they may be incarcerated and their property may be seized.

Based on the above definition paying income tax is a statutory obligation. We are forced to pay tax whether we like it or not. The only choice we have is to arrange our affairs within the tax system in such a manner as to pay the least amount of tax. But even this limited freedom is frowned upon and is actively discouraged.

Applying tax avoidance strategies is regarded by some as morally offensive because it shows a disagreement amongst the parties as to the terms and conditions of the “social contract”.


The problem is that tax is determined by politics. The types of taxes and the amounts to be paid are informed by a ruling party’s manifesto and election promises. This seeks to accelerate economic development by more state intervention. According to the ANC “The ownership of the economy is still primarily in the hands of white males, in which it has always been…It is time to ask questions about the present and future… the last 22 years was the first transition. We are calling for a dramatic shift… to deal with the triple challenge[s] of poverty, unemployment and inequality.” Proposals include free education, nationalisation of certain industries and land reform.

Karl Marx in his Communist Manifesto states that “Political power, properly so called, is merely the organised power of one class for oppressing another”. He believed that the end justifies the means. He had a moral idea of how society should operate and was willing to use statutory rules to obtain a moral idea. He therefore believed that, until class
distinctions have disappeared it would be necessary to make use of “despotic inroads on the rights of property, and on the conditions of bourgeois production; by means of measures therefore, which appear economically insufficient and untenable, but which, in the course of the movement, outstrips themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionising the mode of production.”

However from a narrow tax profession perspective, it is of little importance whether one supports the second transition or any other politically favoured idea. The bottom line is that taxes will be levied to pay for any change in policy, irrespective of one’s political persuasion.  It matters not whether you believe that the ANC’s policies are more moral than, for example, the DA’s. Indeed no objective measure exists to determine this. It boils down to personal preference and imposing taxes to fund your preferences.

Countries compete for people nowadays. The rich (and their money) have never been more mobile. If governments grow too greedy, then men in pinstripes will start queuing for the next available flight to a more tax friendly jurisdiction and wealth will flow outwards.

Carlos Bonifacio

Carlos Bonifacio

I have spent the last 21 years in the Auditing profession spanning all auditing functions including due diligence, forensic accounting and reconstruction as well as the provision of management advisory services, taxation of trusts, individuals and companies.

I specialised in strategic business planning, company valuations, analysis of financial statements and the design and implementation of business systems.
Carlos Bonifacio