The purpose of tax, according to a simple online search, is “to fund social and economic programmes, and to provide public goods and services, such as schools, universities, hospitals, clinics and roads, as well as defence and security”. Taxes make functional democracies sovereign and operational. The question of who has the ultimate authority to decide how to tax society is covered by our constitution.
The authority originates from the mandate our elected representatives receive from us when we vote. They serve at our pleasure for a five-year term and must account for and renew their mandate. They elect a state president who serves at the pleasure of parliament. The president exercises executive authority together with cabinet members. The minister of finance is responsible for developing tax policy.
With the origin of the authority clarified, it is essential to note that a primary majority of 51% determines the extent to which the absolute power to govern can be exercised. Where no party has more than a 50% majority, the authority to govern is through a power-sharing arrangement.
This constitutional facility is a direct result of the liberation struggle demand that “no government can justly claim authority unless it is based on the will of all the people”. If the people's will dictates power sharing, no wishful arrangement can change democracy's full impact.
This budget interrogation over VAT foregrounded the minister's powers, and wrestled them back into parliament. Regulatory power without oversight breeds authoritarianism. The seeds of a prerogative and arbitrary state might have settled in some executive authority domains when the absolute power to govern belonged to one party.
This phenomenon originated in the old colonial hold of the Treasury, predating the ANC. Arguably, this is why the abuses and vices of the apartheid system could not attract any normative review. To attune to the liberation promise in the constitution, this budget interrogation window must be exploited by parliament to unearth colonial and apartheid algorithms in the constitutional order.
Whatever spin doctoring may be employed by political parties over this monumental victory against the arbitrary power to levy tax — and restore it to the realm of government of, by and for the people — it belongs to the May 2024 election outcome.
South Africa should celebrate the reversal of the VAT increase as a dividend of the ethos that “the people shall govern”. What is scary to imagine is what would have happened if the original intent to increase VAT to 17% had found one party with a 50% plus majority to govern. Compromise came later as threats of litigation and other mechanisms started to tilt the balance of forces in favour of a reversal. This is a moment when the checks and balances in the South African constitution have shown themselves to be among the best in the world.
This representation facility of “we the people " has been used, arguably for the first time since 1910, to question and stop the implementation of the fiscal framework. It is no longer a given that tax and budget decisions will be subject to the technical correctness of Church Square in Tshwane. They have now shifted to the town halls, where we, the people, reign.
Whatever spin doctoring may be employed by political parties over this monumental victory against the arbitrary power to levy tax — and restore it to the realm of government of, by and for the people — it belongs to the May 2024 election outcome.
With all the discontent the outcome carries, it has allowed for “the people” to have an enriched relationship with the democratic order. What has not happened yet, and should be encouraged to happen, is the interrogation of all similar revenue-raising decisions: the municipal property ratings, the Nersa electricity tariffs determination and other regulated pricing regimes.
The retreat on VAT presents an opportunity for society to express itself. This aligns with what our constitution signified when it established an open society. Our elected public representatives have taken three decades to unite in our interest. Now that they have, we must demand more from them to reshape the demographic consequences of budget decisions. The next budget should be approved only after it has addressed spatial per capita questions.
The out-of-court settlement sought by the ANC over the VAT hike case should concern us as a civil society. The issues raised in the affidavit are of such constitutional significance that it would have been prudent for the case to continue and establish case law for future reference.
* Mathebula is from the Thinc Foundation, a Tshwane-based think-tank. He is the head of faculty: people management at The Da Vinci Institute and a research associate with TUT
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