Prosperity with pride reached through meeting tax obligations, USB told
The boards of South African companies have three interlocking legal, moral and patriotic responsibilities, contends Pierre du Toit, advocate, chartered accountant and consultant with KPMG.
He recently addressed an audience at the University of Stellenbosch Business School (USB) monthly Leader’s Angle talk series, a forum that shares leadership know-how with a broader audience.
Boards have three responsibilities, he suggested: Comply with tax law and pay every cent. Comply with your fiduciary responsibilities under company law and manage your companies to the after-tax bottom line. Then go beyond the law with a sustained programme of social investment.
Du Toit has been intimately involved in the development of tax policy for South Africa as a member of the tax committee of the ANC and later as a member of the Katz Commission of Inquiry into South African tax reform.
He said the broad economic model from 1994 was that the private sector primarily would produce the national wealth, while the public sector primarily would be responsible for economic reconstruction, re-distribution and the management of poverty alleviation. Finite economic resources therefore had to alleviate near-infinite need – “a need that is not mere statistics but represents over 20 million live human beings with skin, tears and pride”. The tax system had to mediate between this supply and need, which made it crucial to the stability and prosperity of the democracy on which all, rich and poor, depended for a future.
He warned that “taxpayer and taxman have an equal and absolute responsibility to protect the tax system as sole arbiter, respected by all as carrying the full authority of the Rule of Law”.
If either side were to allow their even well-meant enthusiasm to smudge the clear boundaries of the law, they were undermining the future of all.
“It is the job of SARS to enforce those laws with consummate objectivity, but also fearless effectiveness. It is the taxpayer’s responsibility unqualifiedly to comply with the law, but at the same time to help hone its long-term robustness by not succumbing to perceived threats or intimidation which might hint at reaching beyond that law.”
It was in this uncompromising mutual respect for the tax system that du Toit saw the first line of morality and patriotism for both sides.
Corporate South Africa had committed to the economic model of the private sector playing a huge role in wealth creation through vigorous management of their companies and their competitiveness right down to the after-tax line – their prosperity was not a right only, but in fact a further patriotic obligation towards the success of the economic model. That patriotism and morality then had to be rounded out by active, practical, meaningful, and sustained social investment initiatives that would help build the society on which all citizens, corporate and otherwise, rich and poor, were dependent for their own survival and success.
"Through boards keeping these simple guidelines in the forefront, corporate South Africa could achieve prosperity with pride,” said Du Toit.
He encouraged boards to propagate this culture of a deep mutual responsibility, across all the dimensions of legality, morality and patriotism, throughout their companies.
He also praised SARS Commissioner Pravin Gordhan and his team for their ever-growing effectiveness “which was securing our young democracy”.
Du Toit pointed out that business – by trusting the law and our courts, managing tax and all other areas of business vigorously and with a transparency that could withstand the light of day and any challenge under the law, and by additional investment in the society that constituted their markets and human resources – would keep increasing the jobs and wealth desperately needed by millions.
“Prosperity and pride can indeed be partners in carrying the South African magic of 1994 deep into the 21st century,” said an upbeat du Toit.
The Leader's Angle series of talks is presented by the University of Stellenbosch Business School (USB), the USB Alumni Association, USB Executive Development Ltd (USB-ED) and the Institute for Futures Research of the University of Stellenbosch, in association with FinWeek and KPMG.
The internationally accredited Stellenbosch Business School offers MBA, Master’s, MPhil and PhD programmes as well as executive education programmes – all focused on the development of business leadership.
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