Tax Ombud Judge Bernard Ngoepe, who served as a judge of the High Court for 18 years before he took optional retirement, recently addressed the Postgraduate Diploma in Financial Planning students via an online session on tax and ethics. Dr Lee-Ann Steenkamp, head of the programme and who is herself a registered Master Tax Practitioner (SA), invited the Judge to share his views as the Tax Ombud in light of the South African taxpayer's increasing mistrust in the government.
Judge Ngoepe has been in the position since 2013 when he took up the role to enhance the tax administration system by taking up complaints on behalf of taxpayers against the South African Revenue Service (SARS) to make sure the taxpayers are treated fairly.
He said: “Tax ethic is a three-dimensional relationship, consisting of the ethics on the part of the taxpayer; the ethical approach on the part of the tax collector; and ethical conduct on the part of those who apply or use our tax."
He added that the taxpayer is an important primary role player. “We need to understand that we have an obligation, both legally and morally, to pay tax and if we were to understand and accept that, we will see it as an important contribution to the economy of the country."
He said that the Tax Ombud demands that taxpayers are treated fairly and ethically to smoothen the relationship between them and SARS and consequently facilitating maximum tax collection. “When people know their tax is going to be used beneficially they will be inclined to pay tax," he said.
Judge Ngoepe also said that the tax collector (SARS) needs to treat people fairly and well. “That means adopting a reasonable attitude towards them and do not discriminate in the collection of tax.
“There are stories that politically connected people are shielded from paying tax. Once you indulge in that you are acting in an unethical manner and that is a problem. It is utterly unethical to have a favourable attitude towards certain people," he said.
“Thirdly is the people who administer the tax. They need to act ethically. People need to feel that the tax they pay is contributing but they will never have the feeling if every other day they read about how politicians in a corrupt manner abuse tax.
“I've been flabbergasted as I read in the news the past few weeks how people exploited the plight and death of people by Covid-19 to make millions and millions. And it is still going on. This is the worst form of being unethical," he stressed.
Financial Planning student Heinrich Venter stated that many tax-paying South Africans are leaving the country or externalising their wealth. He asked the Judge under what degree of pressure SARS is to find other ways to tax more or whether it's a case of spending the tax more wisely.
In his response, Judge Ngoepe compared it to the chicken and egg dilemma. “My starting point is that your taxpayer is like the chicken that lays the golden egg. That is what you protect. Don't startle the taxpayers, otherwise, they won't lay eggs.
“The crucial thing is how you treat taxpayers. You need to maintain a balance. It is not easy but important."
“Don't tax them in such a way that you tax them out of existence. But at the same time, and that is where the story of the chicken and egg comes in, you need to build an economy but you can't build an economy without tax. It always comes back to the issue of using tax correctly so that you encourage taxpayers to pay what they should pay," he said. “The crucial thing is how you treat taxpayers. You need to maintain a balance. It is not easy but important."
Dr Steenkamp reiterated the important role that professional bodies play in the tax arena. As future CERTIFIED FINANCIAL PLANNERS® and members of the Financial Planning Institute of Southern Africa (FPI), she stated that graduates of the University of Stellenbosch Business School (USB) will one day become eligible to register as tax practitioners. This, she cautions, would place an extra burden of professional care on them to maintain impeccable ethical standards.