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Constitutional considerations of Tutu’s tax on Whites

01 October 2011 Robert W Vivian, University of the Witwatersrand

Arch Bishop Emeritus Tutu’s call for a tax on whites received wide press coverage recently. But is his proposal, given the constitutional history of taxation, constitutional?

Initially it was not clear whether Tutu was issuing a new call for a tax on whites, or simply restating a call he made when involved with the TRC. He has since clarified his stance – and despite not being a constitutional authority – expressed the view that such a tax would be constitutional.

Shortly thereafter Prof Pierre de Vos, professor of Public law at UCT, who also professes to be an authority on constitutional law, said that he too was in favour of a tax on whites. One would assume that in expressing this view he was bringing considerable constitutional scholarship to bear on the issue – even implying such a tax would be constitutional. I strongly disagree and suggest constitutional considerations deserve a more detailed response.

Too much government expenditure

The ageless and universal problem with taxation is that governments have an insatiable appetite for money. It does not matter how much money a state takes, it will always wants more. And even if every person pays their tax dues the amount collected will be insufficient. History therefore teaches us that neither taxes, nor debt, nor printing money can reduce government expenditure. After exhausting the taxing capacity of the country, thereafter, comes debt. And when this is exhausted as has happened in countries such as Zimbabwe, governments turn to printing money producing inflation.

Governments’ expenditure is the single largest economic threat facing mankind today! The problem has reached crisis proportions worldwide, threatening global economic stability. Government after government has run up unmanageable deficits which in turn is threatening the global banking system. These countries include America, the United Kingdom, Greece, Spain, Italy to name a few...

The law of general application

Taking money from residents creates another problem, namely who to take it from. Tutu’s suggestion that taxes be ‘taken’ from whites attacks fundamental historical constitutional principles. These principles can be clearly mapped out by examining the history of English taxation.

When King John (1215) exceeded his financial resources, his solution was to tax by decree. His subjects, mainly the Barons, to his way of thinking would be obliged to give him all the money he wished, simply because as king he commanded them to pay. In those days taxes were not imposed on the man in the street, but only on the Lords and Barons. The Barons were able to oppose the taxes – and they did! Their response to King John’s demands was to force him to sign one of the first and most important constitutional constraint documents, the Magna Charta (1215). There would be no taxation without consent.

Constitutional limitation was subsequently institutionalized in the UK through the establishment of Parliament. In this matter the King and Parliament were on opposite sides; he wanted, they had to consent. The Barons paid tax in proportion to their income as measured by the size of their estates. There was equality of taxation.

Taxing the poor

As time passed English governments found ways to tax the poor. A second tax known as excise tax was introduced. This was an indirect tax which fell almost exclusively on the poor who were not represented in Parliament (at the time the voting rights were limited to the wealthy). This shift in the tax burden continued until the late 1700s by which time the tax collected from land taxes (the wealthy) had halved, while the tax collected from the excise tax (the poor) had increased hand over fist.

Now the King and Parliament were on the same side. Parliament, instead of reining in government expenditure as per its constitutional authority, was merely shifting the burden of its expenditure onto the poor who could not consent, since they were not in parliament. Even worse, many of the Lords had inveigled themselves onto the state payroll. Parliament was not only shifting the tax burden to the poor, but many members of Parliament had themselves jumped onto the gravy train. Parliamentary protection against excessive taxation designed by the Magna Charta had failed.

It was about this time that David Hume the Scottish philosopher noted, “Every man, to be sure, is desirous of pushing off from himself the burden of any tax which is imposed and laying it upon others.” A general rule had evolved. Anyone with political power, unless restrained, will use that power to tax others (and benefit from it). In the face of the failure of Parliament, how then was the power to impose tax on others to be curbed?

Law of general application

England, in the face of a popular revolt post French Revolution, decided to introduce income tax to signal the end of tax inequality. For the first time income tax was applied as a totally general tax. Lower income earners were totally exempted from income tax and it was imposed on all other earners at a single rate. The protection against arbitrary taxation had moved from Parliament to the Rule of Law. The solution to Hume’s observation was that taxation was to be imposed strictly in terms of a law of general application.

In 1832 the great Reform Act was passed broadening the right to vote. From this point onward lower income persons were represented in Parliament and a new possibility arose, a class war, the ability to tax the rich. Despite the 1832 Act the bulwark against unfair taxation remained the Rule of Law and the tide of unequal taxation was held back by the Rule of Law for more than a century after the introduction of income tax. The law was simple – an exemption for the unrepresented and a single tax rate.

In 1909 the spectre of rising government expenditure returned. The British government wanted plenty of money to build a fleet of massive battleships, the Dreadnoughts. For the first time a differential tax rate was introduced, with a higher rate of tax for the rich. The Rule of Law was breached and tax was no longer imposed in terms of a law of general application. A higher tax for higher income earners meant that the class war became a reality.

The power of the vote

This again illustrated David Hume’s rule. The masses – encouraged by their new found political power, shifted the tax burden onto those without power. The rich were now represented by an ineffectual minority in Parliament. By the time Margaret Thatcher came into office the top rate exceeded 100 per cent! She reduced the top rate but did not succeed in reducing government expenditure.

The constitutional defence against arbitrary discriminatory taxation is the Rule of Law. All taxes – including the seizure of property by the State – are to be levied in terms of laws of general application. This is fundamental principle is embodied in our constitution which clearly states that the rights, including the right to property, enshrined in the Bill of Rights, can only be abridged in terms of laws of general application.

An unconstitutional tax

It should be clear to all that it would be unconstitutional to levy a specific tax on whites. This could only be done by specific racial law, something which our Constitution exists to prevent. In fact that’s what nearly 2000 years of constitutional law has been about.

To specifically tax whites would be a breach of the constitutional principle and the specific provisions of the Bill of Rights. Will the fact that it is unconstitutional to levy a separate tax on whites stop this from happening? It is unlikely the constitution by itself will achieve this.

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