Defaulters ‘rewarded’ by being spared property tax, Chamber denounces unfairness

The Chamber of Commerce has called out a new budgetary measure that allows businesses with tax arrears due by January 2021, to not pay any tax due on the transfer of property purchased before March 2021, against their arrears.

The new measure allows them be exempt from tax on property transfers to the extent that they are in arrears.

The Chamber said this was an unfair practice. “Like every other scheme intended to bring taxpayers in order, this scheme benefits only the defaulters, and does not consider those who have their tax payments in order,” the Chamber said.

“This in itself is unfair on those employers and businesses who pay their taxes when and as due.  This legal notice seeks only to proliferate an un-level playing field in favour of those who are in default and who are in the habit of using their due tax monies as their overdraft facility.”

The Chamber says that the legal notice suggests that tax defaulters that do not have the money to settle their dues promptly, can only do so by liquidating their property. “This legal notice indicates that government believes that tax monies have been used to purchase property... If we do not want to see any more of this cavalier behaviour in the future, we should make sure that people are not able to purchase additional property before they settle their tax arrears.”

The Chamber said that only then, should an exemption from tax on property transfers be allowed until 31 December 2022, and be effective in curbing old habits.

“Those who default on tax payments to finance speculative activities may also end up delaying settlement of trade credit indefinitely, to the detriment of businesses that supply them.

“Such practices are extremely damaging and need to be discouraged. It would be good to see schemes designed to help businesses recover their dues from defaulting unrelated parties who are heavily invested in property.”

The Chamber wants a blacklist of businesses that do not honour their tax obligations and to be banned from participating in public procurement. “There is no level-playing field between businesses that honour their obligations and those who do not. Competitive calls must factor this in to encourage more compliance and curb unfair practices.”