Free Market Foundation CEO David Ansara advised South Africans to state-proof themselves, which includes paying as little tax as possible.
Speaking to The Penuel Show, Ansara advised individuals and businesses to become self-sufficient and move away from their reliance on the government.
He said the government is collapsing, the country is running out of money, and things are falling apart across South Africa.
Ansara argues the best answer to state failure is ‘state-proofing’ – an approach that recognises the state for what it truly is and not what it claims to be.
He provided six practical ways in which South African citizens and businesses can become self-sufficient and minimise the impact of the state.
- Avoid paying too much tax – Seek the right legal and tax advice to lower your exposure while staying within the bounds of the law.
- Big businesses should stop supporting the government – Business leaders should follow the late Pick n Pay founder Raymond Ackerman’s good example. He did not let politics silence him or co-opt his good name.
- Support civil society organisations – Organisations like Sakeliga, the FMF, the IRR, Solidarity, AfriForum, Outa, and Gift of the Givers uphold the constitutional state and create alternatives to unbridled statism in South Africa.
- Roll up your sleeves – It is no good whining over the proverbial braai about why your local municipality has not fixed the growing number of potholes on your street. Why not fix the pothole yourself?
- Shift your mindset – The best way to state-proof yourself is psychological. Change your attitude of relying on the government.
- Avoid defeatism – The very harmful South African government is not an all-powerful institution. Things can get better and get better quickly.
“The state was never meant to be ‘responsible’ for everything like we think it is today, and hence, the state is predictably failing,” Ansara said.
Avoid paying taxes
Ansara advised South African businesses and individuals to avoid paying more tax than needed.
The basic idea of paying taxes is that individuals give the state money and get services in return.
“The state is responsible for managing those resources judiciously and effectively. We are very far away from that,” he said.
He argued that depriving the state of resources is effective leverage for individuals and companies to drain power from the state.
Ansara stressed that he is not advocating for people to break the law and engage in tax evasion. Instead, he advised South Africans to focus on tax avoidance.
Tax evasion is a form of tax fraud where people use illegal methods to hide income or information from the South African Revenue Service (SARS) to avoid paying taxes.
Tax avoidance is using legal ways within the current tax regime to reduce the amount of tax a business or individual pays.
He advised South Africans to consider using legal ways available in the current tax regime to reduce the tax they pay.
One of the easiest ways for companies is to change a business structure by establishing an offshore company in a tax haven.
“An easy way to limit your tax exposure is to incorporate a holding company in a jurisdiction like Mauritius, which has a double taxation agreement with South Africa,” he said.
Mauritius has a 15% corporate tax rate and no dividend withholding tax. “Through clever structuring, you can lower your taxes,” he said.
He said that at the local government level, ratepayer associations are taking power away from dysfunctional municipalities.
For example, the Westville Ratepayers Association (WRA) have withheld approximately R1.2 million from the eThekwini Metro since 31 July.
Ansara encouraged individuals, businesses, and communities to take it upon themselves to provide the services they need.