The row over tax avoidance has hotted up since Personal Finance reported two weeks ago that under pressure from Deputy Finance Minister Gill Marcus the life assurance suspended products designed to help individuals escape tax.
The action has drawn strong criticism from a number of quarters including from Personal Finance columnist Magnus Heystek, who said it was the right of the taxpayer to avoid taxation and extensive queries from readers who fear being penalised retrospectively for investing in tax avoidance products.
Marcus has responded strongly to Heystek in a letter to Personal Finance.
And this week, evidence before a parliamentary committee confirmed that there was widespread resistance to paying tax.
The result of the pervasive tax evasion has been that an ever increasing burden is falling on the shoulders of a limited number of taxpayers.
Marcus is adamant that loopholes, such as black hole and secondhand policies which allow tax avoidance, should be plugged as they erode the overall tax base, increasing the load on some taxpayers: "When the tax base is being eroded no government can simply sit idly and look on."
Marcus said the government could either launch an attack in terms of legislation that seeks to limit tax avoidance schemes or "deal more expeditiously and prospectively by advising that legislation will be introduced, if necessary, to reduce such practices".
Both sides are accusing each other of misunderstanding the issues.
In a recent newsletter, Matthew Lester of accounting company BDO Spencer Steward asked: "What qualification do ministers of finance in South Africa have in common?
"Answer: Zero appreciation of the difference between tax evasion (a very naughty no-no) and tax planning, (a fundamental right.)"
Lester quoted a 1928 court case where the judge said taxpayers were free to arrange their affairs to avoid tax without incurring legal penalties.
Lester said: "No man in this country is under the smallest obligation, moral or otherwise, to arrange his legal relations to his business or his property as to enable the Inland Revenue to put the largest possible shovel into his stores.
"The Inland Revenue is not slow and quite rightly to take advantage open to it under existing tax statutes for the purpose of depleting the taxpayer's pocket and the taxpayer is, in like manner, entitled to be astute to prevent, as far as he honestly can the depletion of his means of revenue."
Marcus says in her letter to Personal Finance that it "is trite to suggest that there is a lack of understanding of the distinction between tax evasion and tax avoidance. Clearly the fraudulent practices which make up tax evasion must be dealt with differently from tax avoidance for they are tantamount to criminal activity".
"It is of concern that criticism is expressed at our efforts to protect the tax base by the same critics who complain our tax rates are too high.
"Unless government can curb such avoidance, there will always be pressure on our tax rates and the tax burden will fall disproportionately on those who are unable to make use of such schemes."