The answer to increased tax collections lies in … happiness – Matthew Lester

JOHANNESBURG — The answers to the big questions sometimes lie in the most unexpected places. Something Rhodes University tax professor Matthew Lester seems to have discovered while on holiday in December. And it’s something that may make sense of South Africa’s slowly evaporating tax collections. And while the usual reasons for the decline lie in sluggish growth, corruption et al. Lester says unhappy South Africans are part of the problem. And what we need to stem the tide is an injection of happiness. An interesting concept that is probably not going to sit well with his peers, but it’s definitely worth a read, it may put a smile on your dial. – Stuart Lowman

By Matthew Lester*

For many years, South Africa’s tax collections have been growing at the above economic growth rates, with the only blip being the financial crisis 2008/9. Then, in 2016, South Africa’s tax buoyancy just evaporated.

The economists and commentators attached the blame to sluggish economic growth, bribery and corruption, the downgrades, JZ and SARS. These are all easy calls. Perhaps we need to dig a little deeper.

When people ask ‘what did you do on your Christmas 2017 holiday?’ I respond ‘I slept like never before. And I kid thee not!’ By December 2017 I was completely exhausted. But why?

I didn’t work any harder during 2017. I didn’t get that much older (although more and more curly grey hairs keep on appearing in all the wrong places.) No, 2017 must have been the most stressful year ever. And the quacks will tell you that that’s why I slept through December. I was stressed out without knowing it.

Matthew Lester

South Africans spent the entire of 2017 bickering, primarily about politics. Some seem to derive pleasure from the doom and gloom forecasts that trend in social media. For others it just creates awful atmosphere and stress. All this reached a height of ‘the publication of the presidents papers.’ The bombardment that is South Africa’s gloomy outlook is relentless.

Over the holidays I did manage to read a very interesting paper ‘Research Schools International: Study into happiness at Eton College.’ It contains some very interesting and helpful observations for all South Africans.

There seems to be little doubt that happiness increases productivity. And vica versa. This is where JZ has failed miserably. He has been unable to make South Africans happy. So productivity has declined. Perhaps this has done more damage to the economy than even corruption, the Guptas and Steinhoff put together. South Africans are in a state of funk.

What can be done about it?

Money is not the answer. Money is like a drug that provides a quick fix or immediate gratification. Followed quickly thereafter by all the adverse after-effects.

Happiness researcher Daniel Gilbert (2017) put it, “If I wanted to predict your happiness, and I could know only one thing about you, I wouldn’t want to know your gender, religion, health, or income. I’d want to know about your social network – about your friends and family and the strength of the bonds with them.” Deep connections with others enrich our lives and form a foundation for happiness across the lifespan.

For a dad like me, who wasn’t even there, that presents quite a challenge.

Other indicators of happiness and include:

  • ownership over one’s decisions
  • Hard work and feeling competent
  • Gratitude for your lot in life

If South Africans could find happiness again that would be worth a whole lot more than any ratings upgrade, the flight of the Guptas, or the replacement of the President. The economy would soon recover and so would South Africa tax collections.

The challenge for President Cyril will not be to impress the rafts of delegates at Davos. The international stage accepts his credentials. If he can make South Africans happier that will be worth a whole lot more.

  • Matthew Lester is an associate professor at the Rhodes Business School and a member of the Davis Tax Committee.
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