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tax-burden

Draft Financial Sector Levies Bill dubbed ‘increased taxation by stealth’

Robert Vivian, professor of finance and insurance in the School of Business Sciences at Wits University and a member of the Free Market Foundation’s Rule of Law Board of Advisors, holds nothing back in an article titled Taxation by Stealth published in Biznews.

In his view, the Draft Financial Sector Levies Bill 2021 is possibly the “single most important piece of legislation ever”. Given the extensive range of laws published since 2004, when the FAIS Act came into being, this is quite a mouthful.

“A long missing ‘money bill’ arrived earlier this year, disguised as the Draft Financial Sector Levies Bill 2021. This bill impacts on the entire South Africa’s financial services industry. In the history of the financial market, this is perhaps the single most important piece of legislation ever.”

The rise of the unitary, autonomous states-within-the-state

“In recent years, we have seen the rise of unitary, autonomous states-within-the-state. These are new institutions that have been artfully designed to combine the three powers of the state into one institution.

“Going back to the Roman days and made famous by Montesquieu, the French writer, it was understood the three powers – executive, legislative and judicial – had to be separated. The new Twin Peak institutions combine all three powers within themselves. They are thus unitary institutions.

“These new institutions thus have the power to make their own laws (legislative power), to implement these laws (executive power) and to have their own judiciary (commissions and tribunals) with punitive powers. ‘Autonomous’ means they do precisely as they please. Their mandates are so general and broad that they have no limiting mandate. They do not have, nor do they operate within, any clear or specific authorisation and are left to decide for themselves where their purpose and power starts and ends.”

Unitary power to tax

Returning to “arbitrary taxation” mentioned above, Vivian notes:

“These institutions have also arrogated to themselves the power to impose taxes and to spend these taxes as they please. They can exist and operate indefinitely without ever having to go back to parliament for any reason. They are thus unitary autonomous states-within-the-state. Because they operate in a country that has a parliament and independent judiciary, they perpetuate the deception that South African is indeed subject to the separation of powers, a circumstance that is sadly no longer true.

“So, the common law remains as it has been for centuries: no taxation without the clear and specific consent of Parliament. Of course, it was not long before attempts were made to sneak new taxes through Parliament. To help prevent this, the practice evolved that taxes can only be imposed in terms of a money bill, which in South Africa must comply with Article 77 of the Constitution. So today, there can be not taxation in South Africa without Parliament passing a money bill.”

Taxes or levies?

“In 2016, when the Twin Peaks legislation was being processed through Parliament, the Standing Committee on Finance asked the question of whether or not the legislation’s proposed levies were in fact not new taxes. After investigation and discussion, it was conceded the levies were unambiguously new taxes. Once this was admitted, it became unavoidable that a money bill would indeed be necessary. That was five years ago. No money bill has yet been passed, let alone any consideration given to an appropriation bill.

“In 2018, a draft money bill was published but never passed. Levies currently being paid by the financial sector are therefore taxes that are being collected unlawfully. Attempts to achieve the imposition of illicit taxes of this nature are what led to the English Civil War and to the American War of Independence. No democratic society has ever submitted to arbitrary taxation, which is what is currently taking place.”

Private sector reaction

Vivian then asks why the private sector has been paying unlawful levies for the past five years.

“Some may argue ignorance. Perhaps this is true in part, but a factual observation points to another more sinister development: the private sector is increasingly being subsumed into the service of government. With the states-within-the-state increasingly relying on their own legislation, implementation, judicial and punitive system, a docile private sector has become systematically conditioned to meekly take instructions from these independent unitary entities, without question or opposition.

“It is well known that all taxes are ultimately borne by the public. Our government has discovered that it is much easier to impose new obligations on the private sector, knowing that the cost of these obligations will inevitably be passed on to the public, than the inconvenience of getting a new tax approved through Parliament. The government thus acts through the stealth of private sector proxies in imposing new taxes on the public. For a similar new stealth tax, one need look no further than the proposed new state-owned bank deposit insurance ‘corporation’.

“The private sector … is thus one of the last remaining institutions that stands between these unelected states-within-the-state and the individual. It too, however, is increasingly failing, imposing upon individuals the tyranny that arises from this loss of constitutional order and protection.”

Parliament becoming another failed institution

“…the South African Parliament is also rapidly becoming a failed institution. It has essentially surrendered its law-making function to ministers and unelected operatives ensconced within these unitary states-within-the-state. Parliament and parliamentarians have thus become largely irrelevant. They have delegated such wide, undefined powers that it is unnecessary for these agencies ever to seek legislation from parliament again. Thus, no institution any longer stands between the unelected arbitrary state agency and the individual.”

As a parting shot, Vivian notes that “… nothing remains between the arbitrary action of the proxies of government and the now unprotected individual”.

One has to ask where Treating Customers Fairly features in this scenario?

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