SA forks out for high crime rate

South Africans are picking up a monumental tab for the state’s apparent or perceived failure to protect them from crime but individuals may not claim tax relief for these expenses.

According to a recent estimate by the SA Institute for Race Relations (SAIRR), South Africans spent a whopping R40-billion on private security in 2007.

This is only slightly less than the R42-billion the government has budgeted for the entire SA Police Service this year and almost double the amount it plans to spend on both prisons (R12-billion) and the courts (R10-billion) in 2008.

The estimate comes in the same week that opposition parties called for tax relief for individuals who invest in their own security and follows a routine interpretation note from the SA Revenue Service (SARS) about security rebates for businesses.

SARS this week explained that businesses may in fact claim for security costs that are of a “revenue nature” such as monthly service fees for satellite tracking systems, payments to armed-response companies and veterinary bills for guard dogs.

However, businesses may not claim for “capital expenses” such as the installation of a security system or acquiring a guard dog.

Individuals are offered no tax relief for private security costs, including for erecting defensive walls, armed-response services, razor wire, guard dogs, insurance or any other security expenses which relate to “non-business activities.”

The Democratic Alliance and the Inkatha Freedom Party both issued statements this week calling for security-related tax relief for individuals, while the Freedom Front Plus reiterated its call for the introduction of a private member’s bill in parliament, which, if passed, would amend income tax laws to give rebates to security-conscious individuals.

SAIRR researcher Kerwin Lebone said this week the institute’s private security spending estimate of R40-billion covered “only direct physical security measures.”

It did not account for medical costs, insurance premiums, loss of income/business, the effects on tourism and the myriad indirect costs of crime to the economy.

Significantly, public perception of a deterioration in the state’s crime-fighting capability over the past decade has been accompanied by a staggering 18-fold increase (3 780 percent) in private security spending – while public security spending has increased by a comparatively modest factor of 3.4 times (245.4 percent) over the same period.

According to the Private Security Regulatory Authority, the number of registered security guards employed in SA has ballooned from 115 331 in 1997 to 296 901 in 2006 – an increase of 157 percent over nine years.

Comparatively, the number of sworn police officials has increased from 110 177 to 114 241 – or 3.7 percent – over the same period. There are currently 2.6 security guards for every policeman.

And while experts agree it is impossible to fully quantify the financial impact of crime, a number of industry-specific figures paint an expensive picture.

Business Against Crime estimates that white-collar crime costs SA between R50-billion and R150-billion each year, consuming between 2 percent and 5 percent of business turnover.

A 2006 study by Christopher Stone from the Centre for International Development at Harvard University suggests the costs of crime to mid-sized enterprises in SA represent 1.1 percent of sales, 3 percent of net value-added and 5 percent of labor costs.

The Consumer Goods Council of SA claims goods worth R3.5-billion were pilfered in 2007 through shoplifting, fraud and robberies – and the sector reported 250 armed robberies at retailers the year before.

Police statistics show robberies at business premises jumped by 52 percent between April 2006 and March 2007. More recent statistics for April 2007 to September 2007 indicate a further 29 percent increase in such robberies, according to the Institute for Security Studies (ISS).

Over the December holiday period, shopowners fork out 15 percent more than usual for added security measures. In 2007 alone, more than R100-million was spent to counter business crime over the festive season, the ISS estimates.

Also in 2007, the banking industry claimed losses of R25-million every month to credit card fraudsters, and warned that this figure is expected to double this year.