why do we pay taxes in south africa
Why do we pay tax? Last month, the South African Revenue Services (SARS) demanded that I pay an extra R17 000 in taxes. I resent it deeply given our politicians' ravenous feeding at the trough and the endless deluge of corruption. Luxurious presidential and ministerial houses, lavish lifestyles, expensive cars, exorbitant salaries and undeserving perks that go with public life have become customary. Julius Malema epitomises this lifestyle. Never having done an honest day's work in his life, he owns a farm, is building a mansion for over R6 million in Sandton, and he has a whopping bank balance. Bankrolled by some of the ANC's elite, his other sources of wealth must surely come from our taxes via the procurement process. I have written to the Treasury asking them to give me a valid reason why I should pay in this amount given that a sizeable portion of the national budget goes into the private pockets of connected individuals. I need an explanation from the Minister of Finance why I need to comply with this demand. SA is a developing nation and despite an increase in tax collection (R599bn in 2009/10, an R8. 4bn increase on the previous year), government has been everything but prudent with the management of the country's financial assets. Total tax revenue is made up of personal income tax (R205,2 billion), value-added tax (VAT) (R147,9 billion) and company income tax (R134,9 billion).
In other words, individuals are heavily taxed
vis a vis companies and vis a vis the appalling services we get in return. In the meantime, government is living it up and we are simply failing to keep government consumption at affordable levels. The widespread abuse of power, greed, corruption, misappropriation and mismanagement of tax revenues fly in the face of our constitutional obligations which demand accountability, transparency and public scrutiny. The fights around public office are so vicious because ANC members know that in running the country they have ownership and control of the economy for their own gain. It is this entitlement that will run SA into the ground. Billions wasted on the arms deal, millions on the travel scandal, hundreds of millions on Bheki Cele's Police Headquarters, not to speak of the investigation of 20 SABC employees accused of R2. 7bn in tender and procurement rigging, leave us reeling just to comprehend it all. Then there is the building of 33 police stations to the value of R330 million without going through due process and the allegations that police officers were involved in their construction. The Department of Public Works itself is a nest of vipers and many of their officials have their hands in the cookie jar.
Chapter 13 of the Constitution spells out very clearly the role of the Treasury and its obligation to "ensure both transparency and expenditure control. " The Treasury may also "stop the transfer of funds to an organ of state if that organ of state commits a serious or persistent material breach of those measures. " Government is in breach of its own Constitution for supporting organs of state that have literally stolen and misappropriated state funds. Instead of an equitable, efficient, and well accounted for tax system meant to achieve economic growth and the development of the poor, the Treasury remains a cash cow for the deployed cadres who will milk it until it is dry. "Throw Them All Out" is a book my daughter sent me for Christmas. It details how American "politicians and their friends get rich off insider stock tips, land deals, and cronyism that would send the rest of us to prison. " Similarly, our deployed cadres belong in jail. Few would be left to govern! This article first appeared in Die Burger. Click to sign up to receive our free daily headline email newsletter Amid new e-toll tariffs, electricity price hikes and a potential fuel price increase, many South Africans are beginning to feel financially overwhelmed.
There is a perception that South African s are overburdened when it comes to paying tax, especially after Finance Minister Nhlanhla NeneВ increased taxes on personal incomes for the first time in twenty years. Data from KPMG which ranks the countries with the highest personal income tax, found that South Africa features amongВ the top 50 highest income tax paying nations in the world. With a peak income tax of 41%, the country ranks as the 31stВ highest tax-paying nation in terms of individual tax. Previously, the country tied with Chile, Croatia and Uganda in 32ndВ position with a maximum tax rate of 40%. In the 2016 tax year (1 March 2015 29 February 2016), South Africa s highest tax rate increased to 41% for individuals earning over R701,301. All South African tax brackets have a base payment, with the percentage applying to the amount over that. The data from KPMG looks at the highest possible personal income tax in the country, discounting the various tax brackets and conditions required to hit that level. For example, in South Africa those earning below R70,700 per annum do not get taxed (R73 650, in 2016), while the entry bracket of 26% applies to those earning over R181,900. According to a quarterly Labour Market Report by Solidarity, published earlier this week, only 3. 3 million out of a total 33 million eligible tax payers in the country pay 93% of all personal income tax.
Worse still, only 3. 7%В вВ or 1. 1 million people в pay just short of 70% of the total income tax received. KPMG lists Aruba as the highest individual taxer, with a maximum tax rate of 58. 95% Aruba s tax applies for people earning the equivalent of R1. 9 million or more, after tax-free income has been deducted. Other high-tax nations include Sweden (57% for those earning over R890,000), Denmark (55% for those earning R850,900 and more) and the Netherlands and Spain (52% on income over R800,000 and R4. 1 million, respectively). Countries with the lowest tax rate include many nations such as Saudi Arabia, Kuwait, Anguilla which do not tax income. Sweden s tax collection agency is one of the most popular and most trusted organizations in the country notably because it works efficiently and contributes meaningfully to Swedish society. Previous research from PwC and the World Bank shows that in 2015 South African businesses pay the 40th highest taxes in the world, paying just under 29% in total taxes. South Africaвs total tax rate for businesses is also the 6th lowest on the African continent, below Lesotho (13. 6%), Zambia (14. 8%), Namibia (20. 7%), Mauritius (24. 5%) and Botswana (25. 3%).
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