The importance of whistleblowers was highlighted again recently in South Africa. In one of the reports released by Judge Raymond Zondo, who has headed up a commission of inquiry into state capture, he recommended that whistleblowers should be protected. He also recommended that they should be given an incentive to make disclosures – a monetary reward based on a percentage of the proceeds recovered on the strength of such information.
Academics, myself among them, have called for similar treatment of tax whistleblowers.
The logic of these calls is that whistleblowers play a role in exposing corruption. In addition, they can expose those who evade paying their fair share of taxes.
In the 2020/2021 fiscal year South Africa’s tax revenue collections declined by 7.8%. This was due to a number of factors, including tax evasion. Exposing tax evaders would be welcomed as it could lead to more tax revenue collections.
In turn, the additional tax revenue can be used by government to realise the socio-economic rights of the people in South Africa.
But can a monetary incentive for a tax whistleblower programme work?
I believe that it can, but South Africa needs to sharpen its laws and regulations. At the moment the country merely makes provision for reporting suspicious tax activity via a link.
I would argue that South Africa should learn from the US’s experience and introduce monetary incentives for tax whistleblowing. In particular, recent developments in the US provide some...
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