Taxpayers 'tend to be demonised'

From Business Report, January 11, 2008

By Ethel Hazelhurst

This was the cry from a tax expert yesterday as he was responding to comments by finance minister Trevor Manuel at the fourth meeting of the Organisation for Economic Co-operation and Development's Forum on Tax Administration in Cape Town yesterday.

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Manuel said poor countries with "less sophisticated" tax administrations "find it
difficult to unravel the complex structures that multinationals and other large
companies put in place to minimise tax".

The tax expert, who did not want to be named, said: "Tax administrators meet regularly and agree on a strategy to mobilise public opinion. They tend to demonise certain categories of tax payers - usually multinationals, big banks, big accountancy and law firms and wealthy private individuals.

"Of course there are always taxpayers who deserve the criticism. And because of this, the whole group becomes a soft target. But not every attack by the tax authority is valid. Each case can only be decided in court and when they do go to court the tax authority usually loses as often as it wins."

In South Africa, tax disputes are heard by the tax court and can then be taken on appeal to higher courts.

However, Manuel was making a broader point, said Billy Joubert, tax director at Deloitte, about the need for partnerships between countries to assist the less
developed countries.