In(direct) Taxes With the Davis Tax Commission in the process of reviewing the South African tax system with the intention of recommending possible amendments, it may be an opportune time to consider the indirect and direct taxes. In particular the advantages and disadvantages of each. Advantages of indirect taxes (i) convenience – payments are generally made at the time of purchase or at source of manufacture; (ii) elasticity – it is generally inelastic; (iii) difficulty of evasion; (iv) equity – contribution is made by all consumers; and (v) social benefit – it attempts to restrict consumption. Advantages of direct taxes (i) economy – the cost of collection is low; (ii) certainty – the taxpayer knows exactly the amount payable; (iii) equity – the incidence of a direct tax is not difficult to judge; (iv) elasticity – they are very elastic; and (v) social effect – the taxpayer is made to feel their personal contribution. Disadvantages of indirect taxes (i) Inequality – they are not always equitable, as on each article the less financially able pay as much as the financially able; (ii) Uncertainty – except for necessaries, the revenue from indirect taxes is not certain, whilst the indirect taxes on non-essential (luxury) goods is dependent on the economic realities of the day; (iii) Uneconomical – the cost of the collection of the tax could well impede its efficiency as part of the tax could well be paid towards its collection cost; and (iv) Social Significance – the civic consciousness of the indirect taxpayer is not stimulated in proportion to the payment made, because the tax is usually hidden or obscured in the price paid for the taxed article. Disadvantages of direct taxes (i) Inconvenience – the taxpayer needs to keep records and complete forms and file returns; (ii) Possibility of evasion – although direct taxes are considered a ‘tax of honesty’ it is possible for the taxpayer to file fraudulent returns; and (iii) Inequality – it is difficult to determine and implement a just basis of assessment for all classes of taxpayers. Duty Calls – Watch List Comment on the proposed amendment of General Note B 4 (Duty Assessment) to Schedule No 1 is due by 30 June 2015. The proposed review of rebate item for plates, sheets, film, foil and strip of polymers of propylene, biaxially oriented, for the manufacture of selfadhesive tape is due by 31 July 2015. Comment on the creation of a rebate item for knitted pile fabrics for use in the manufacture of other home textiles; and the proposed reduction in the ‘General’ rate of customs duty on diesel, petrol and electric passenger vehicles is due by 17 July 2015. Comment on the possible termination of anti-dumping duties on blankets; bolts and nuts of iron or steel; Polyethylene Terephthalate (PET); and unframed glass mirrors, is due by 27 July 2015.
