The Simplification of Country and International Tax

by Antony Last

Tax was levied in China 3000 years ago and in Egypt 3500 years ago. We know this from the written record (http://newint.org/features/2008/10/01/tax-history/).

Every year governments around the world enact more and more tax laws, regulations and rules in an attempt to better control the payment of tax.

“We find that for those filing their personal income taxes on 15 April 2014, they must comply with the terms of a tax code that takes 73,954 pages to explain. To tax professionals.” – http://finance.townhall.com/columnists/politicalcalculations/2014/04/13/2014-how-many-pages-in-the-us-tax-code-n1823832

US Federal Tax Law has gone from 400 pages in 1913 to 16,500 pages in 1969 to 73,954 pages in 2013. See this neat depiction also taken from the above-referenced Townhall Finance article:

wolters-kluwer-cch-tax-law-pileup-2013

‘The Income Tax Act, 28 of 1914 introduced income tax [in South Africa] on 20 July 1914. The origins of our legislation lies in Australia, as this act was based on the New South Wales Act of 1895. The first level of the tax rate, according to section 4(4)(a), was: “Where the taxable amount is one pound, the rate of income tax shall be sixpence ;” or 2,5%. The original act consisted of 50 sections with no Schedules, compared to the current act, which has 112 sections and 11 Schedules.’ – http://www.sars.gov.za/Tax-Can-Be-Fun/Pages/And-did-you-know.aspx

And, this cites the Income Tax Act only. What about these other tax laws in South Africa?

  1. COUNTERFEIT GOODS ACT NO. 37 OF 1997
  2. CUSTOMS AND EXCISE ACT NO. 91 OF 1964
  3. DIAMOND EXPORT LEVY ACT ACT NO. 15 OF 2007
  4. DIAMOND EXPORT LEVY (ADMINISTRATION) ACT NO. 14 OF 2007
  5. EMPLOYMENT TAX INCENTIVE ACT NO. 26 OF 2013
  6. ESTATE DUTY ACT NO. 45 OF 1955
  7. MERCHANT SHIPPING (INTERNATIONAL OIL POLLUTION COMPENSATION FUND) ADMINISTRATION ACT NO. 35 OF 2013
  8. MERCHANT SHIPPING (INTERNATIONAL OIL POLLUTION COMPENSATION FUND) CONTRIBUTIONS ACT NO. 36 OF 2013
  9. MINERAL AND PETROLEUM RESOURCES ROYALTY ACT NO. 28 OF 2008
  10. MINERAL AND PETROLEUM RESOURCES ROYALTY (ADMINISTRATION) ACT NO. 29 OF 2008
  11. SECURITIES TRANSFER TAX ACT NO. 25 OF 2007
  12. SECURITIES TRANSFER TAX ADMINISTRATION ACT NO. 26 OF 2007
  13. SKILLS DEVELOPMENT LEVIES ACT NO. 9 OF 1999
  14. SOUTH AFRICAN REVENUE SERVICE ACT NO. 34 OF 1997
  15. TAX ADMINISTRATION ACT NO. 28 OF 2011
  16. TRANSFER DUTY ACT NO. 40 OF 1949
  17. UNEMPLOYMENT INSURANCE CONTRIBUTIONS ACT NO. 4 OF 2002
  18. VALUE-ADDED TAX ACT NO. 89 OF 1991

And, the tax guide called “Taxation in South Africa 2014/2015” is 98 pages long (http://www.sars.gov.za/AllDocs/OpsDocs/Guides/LAPD-Gen-G01%20-%20Taxation%20in%20South%20Africa%20-%20External%20Guide.pdf).

Again, a compounding of tax laws, rules and regulations.

Sometimes such complicating of tax systems can lead to major injustices and social imbalances, such as the lowering of the income tax rate in the US state of North Carolina during September 2015, and the simultaneous implementation of a new law to tax car and appliance repairs. This shifts the tax burden from the rich to the poor (http://www.newsobserver.com/opinion/op-ed/article36473067.html).

Complex systems are susceptible to failure as there are so many things to monitor and which might go wrong. Such failures can have a knock-on effect with potentially disastrous results (https://en.wikipedia.org/wiki/Complex_system).

Hence the emergence of slogans like:

“Less is more.”

“Simple is better.”

Steve Jobs of Apple said: “Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there you can move mountains.”

Thus, this publication is built on the premise that tax laws are unnecessarily complex and burdensome and need to be simplified.

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