N6 – Module 5


Absence of Quid Pro Quo (Latin: something for something) A taxpayer cannot expect to receive measurable value for each unit of currency paid over in the form of taxation. Taxpayers may not use the argument that because they pay Rx in tax, they may spend a certain period of time in a park.


All taxpayers irrespective of their contribution to state revenue, enjoy equal access to collective services. If one looks at the example of roads: the following two situations illustrate this characteristic of taxation – namely that it is impossible to charge a measurable amount of money (something) for a measurable amount of usage, either in time or in amount (something). Taxpayer B: pays R5 000 tax per year. He owns a bicycle and rides to work. Taxpayer P: pays R45 000 tax per year. She owns three motor cars.


It might be argued that P pays more tax, and uses the roads more than B. And this would be true – one might even be tempted to say there is at least some quid pro quo – more benefit for more payment. But what of the following situation:


Taxpayer C does not earn enough to pay any tax. His family is constantly ill and needs medical attention.


Taxpayer H is taxed at the maximum. His family is seldom ill, and when they are they use private hospitals only.


In the above example, taxpayer H cannot refuse to pay tax; he may not say, “I do not use provincial hospitals, and therefore should not be paying such a high tax rate.” Tis means, in fact, that the more the taxpayer uses collective services, the greater the value that taxpayer receives. Tis is a principle that is both ethical and just. It is also a source of frustration to many.


Example: Jabulani and David Jabulani is thriſty, works hard, keeps himself fit, drives carefully and looks aſter his motor car and home. Next door lives David who does none of these – he drinks oſten, drives when he is drunk, causes accidents and has cost his employer a great deal of money in lost man-hours etc. What is interesting is that Jabulani also feels David has cost him money. By not looking aſter his car, more air pollution is caused; by causing accidents, police, ambulance and medical personnel are required; by staying at home, David is less productive at work (which has an effect on the whole economy). Jabulani might feel even more angry with David when he finds out that he pays far more tax than David does.


Of course David’s actions might hardly cause a ripple when viewing the whole country; but should there be more Davids than Jabulanis, a country would be in trouble; the Jabulanis would indeed begin to feel frustrated.


Types of Taxation


Te main sources of revenue for the state (government) are: 1. Income tax – taxation on the income of individuals (personal taxation) and also companies (also known as corporate taxation);


2. Wealth tax – property, capital gains tax & duties; 3. Consumption tax – VAT, import & excise duties; 4. User charges, tariffs.


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