The “draconian” powers sought by the South African Revenue Service (Sars) in terms of draft legislation should be rejected as unconstitutional, the Law Society of South Africa (LSSA) said on Thursday.
“At the very least they should be postponed for further investigation and proper consultation with interested bodies and organs of state,” it said.
In its comments on the draft Taxation Second Laws Amendment Bill, submitted to Parliament and the National Treasury, the LSSA recorded the strongest possible concern that many of the proposed amendments appeared to be unjustifiably hostile to even the most compliant of taxpayers.
There appeared to be a tendency in this and earlier legislation to set the compliant taxpayer up for exorbitant and severe penalties for even the most innocent miscalculation, the society said.
“The enforcement and other powers sought by Sars officials in terms of the proposed legislation are extreme and unjustified.
“There appears to be little regard for the constitutionally protected rights of the taxpayer.
“It is as if there is an attempt to impose, through the office of the tax collection agency, a reign of terror upon all compliant and taxpaying residents with no evident attempt to bring participants in the notoriously non-compliant informal sector to account.”
The minibus taxi industry was an extreme but appropriate example, the society said.
The LSSA was convinced that the solution to the problem of non-compliance, to the extent that it was a problem, was not to be found in conferring even more oppressive powers on revenue officials, concentrating their statutorily endowed collection prowess on the soft targets of innocent and compliant taxpayers.
Many of the proposed amendments raised concerns over the apparent abandonment, by those responsible for draft legislation, of their constitutional duty to promote and enhance, or at least not to undermine, the values enshrined in the Constitution.
“Many of the proposed provisions exemplify a complete absence of any appreciation of the obligation on organs of state to protect and enhance constitutional values,” the LSSA said.
Questioning, among others, the “pay now argue later” rule, the society said it was inappropriate that taxpayers should be condemned to pay penalties and additional taxes without due process.
“Ordinarily, one would assume that it is designed to protect the interest of the fiscus in the collection of taxes reasonably — but subjectively and without due process and often erroneously — considered to be payable.”
The LSSA said different considerations applied to the collection of administrative penalties and additional taxes levied in terms of provisions that were intended to be penal in nature.
It was inappropriate that a taxpayer should be condemned to pay penalties and additional taxes without due process.
“The LSSA submits that, whatever justification there might be in a particular case for the immediate collection of taxes suspected to be payable, there can never be justification for the enforced payment of additional taxes and penalties without due process.
“The proposed amendments do not, but ought to, address this distinction,” the LSSA said. — Sapa