The winds of change : an analysis and appraisal of selected constitutional issues affecting the rights of taxpayers

Abstract

Prior to 1994, South African taxpayers had little protection from fiscal legislation or the
\ndecisions, actions or conduct of the South African Revenue Service (“SARS”) that violated
\ntheir common law rights. Parliament reigned supreme and in tax matters, the strict and literal
\napproach to the interpretation of statutes was employed, with the judiciary often quoting the
\nmantra that there is “no equity about tax”. The Income Tax Act (Act No 58 of 1962) was
\nlittered with discriminatory and unfair provisions based on age, religion, sex and marital
\nstatus. Even unreasonable decisions taken by SARS could not be reviewed by the judiciary as
\n“unreasonableness” was not a ground for review of the exercise of a discretion by SARS. On
\n27 April 1994, the constitutional order changed. Parliamentary supremacy was replaced with
\nconstitutional supremacy and the rights to privacy, equality, human dignity, property and just
\nadministrative action were codified in a Bill of Rights. The codification of these fundamental
\nrights has materially changed the nature and extent of the rights of South African taxpayers.
\nThe objective of this thesis, therefore, is to identify, analyse and discuss South African
\ntaxpayers’ rights from a constitutional perspective.
\nThe following major conclusions can be drawn from the research done:
\n
\n- the judiciary have been forced to reappraise their approach to the interpretation of statutes
\nfrom a “strict and literal” to a “purposive” approach that is in accordance with the values
\nunderpinning the new constitutional order;
\n- new legislation has amended some of the so-called “reverse” onus of proof provisions that
\nwere constitutionally unsound – this should result in greater fairness and consistency for
\naffected taxpayers especially in the area of when penalties may be imposed;
\n- the concept of clean hands and good facts can influence the judiciary when arguing that a
\ntaxpayer’s right to just administrative action has been violated; and
\n- discriminatory and unfair legislation and conduct on the part of SARS may and should be
\nattacked on a substantive law basis, especially where human dignity is at stake.
\n
\nThe overall conclusion is that taxpayers’ rights are more far-reaching than prior to 1994 but
\nstill have some way to go before they are fully interpreted and developed.