The implementation of new taxes could leave the taxman working around the clock attempting to collect revenue from confused taxpayers, who will be tempted to evade them altogether.
This warning comes from the South African Institute of Chartered Accountants in a letter to Parliament's finance committee.
The institute is particularly concerned that the South African Revenue Service (SARS) does not have sufficient resources to properly implement the new residence-based tax on nearly all income, including investment income earned abroad, and the proposed capital gains tax.
The institute says a number of measures will have to be taken to avoid tax evasion and confusion among taxpayers. These measures should include:
* A simplification of the tax laws to make them more understandable to ordinary people. Although Finance Minister Trevor Manuel promised in 1997 that the Income Tax Act would be simplified, it has become even more complicated with the introduction of numerous new taxes;
* An increased level of funding for SARS so that it is better equip-ped to deal with the "highly complex provisions that are coming into force ...". The institute says although there has been an improvement in the taxman's attitude towards taxpayers, the introduction of the New Income Tax System (Nits), which tracks numerous financial transactions, has been fraught with difficulties;
* Amnesty for those people who smuggled an estimated R80 billion out of the country during the days of apartheid and tight exchange controls. The purpose of the amnesty should be to "legitimise the funds that have been transferred abroad and to facilitate that the income derived from such funds is in fact declared for tax in South Africa".
The institute says without the amnesty it is highly unlikely that the income derived from money illegally invested in foreign countries will be declared;
* A media education programme to educate "taxpayers about their fiscal responsibilities", as complex tax laws "may encourage tax evasion and result in a further decline in tax morality"; and
* The introduction of a taxpayers' charter of rights and an ombudsman who can deal with differences with the taxman.
In a separate document on the charter, Beric Croome, chairman of the institute's taxation committee, says a draft client charter was released by Manuel in the 1997 Budget which "contains a brief outline of taxpayers' rights and obligations, but unfortunately contains no effective remedy".
"The client charter is merely a statement of intent and has not been enshrined in any fiscal statute and does not, at this stage, have any effective remedy."
It is also essential "to educate both taxpayers and the South African Revenue Service's staff on the provisions of the client charter, particularly in respect of taxpayers' rights and obligations". This education programme should include the publication of booklets and guides on taxpayers' rights.
Croome says that as part of the mechanism to protect taxpayers and ensure that they are given proper service, serious consideration should be given to appointing a tax ombudsman.