×

We've got news for you.

Register on SowetanLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now

Taxpayers face tough times ahead: Solidarity

Trade union Solidarity has detailed how South Africans are paying more tax than they think they do in a report compiled with in collaboration with investment firm ETM Analytics.

The report released in Pretoria on Tuesday paints a bleak economic future‚ stating that South Africans would have to pay even more tax due to rising government debt‚ political expectations and government interference in the economy.

The report shows that SA’s gross national debt has increased sharply over the past six years‚ with Piet le Roux‚ head of the union’s Research Institute‚ warning that the national debt could increase from R1‚8-trillion in 2014/15 to R2‚3-trillion in 2017/18.

“More debt means higher debt servicing costs‚ even in an environment of low interest rates. Given the tide of increasing government spending‚ debt servicing costs and difficult economic circumstances‚ taxpayers must brace themselves for tough times ahead‚” Le Roux said.

Le Roux said this was worsened by the fact that a small fraction of the South African population was responsible for the lion’s share of the taxes paid.

“Out of a population of 55 million people‚ of which about 30 million are of working age‚ a mere 1‚1 million people pay 70% of all personal income tax. This distorted situation also exists with regard to other types of taxation such as company tax and VAT‚” he said.

Le Roux said the so-called “tax relief” with which former finance minister Pravin Gordhan‚ tried to appease tax payers in recent years‚ was also merely a ruse.

“Contrary to his repeated announcements of tax relief‚ Gordhan made sure that since 2012‚ personal income tax has increased annually through bracket creep. Bracket creep occurs when income tax brackets are not adjusted sufficiently for inflation.”

Le Roux said Gordhan’s hidden increases should be added to the overt increases introduced by his successor‚ Nhlanhla Nene‚ this year.

“Someone who earned a pre-tax income of R25000 per month in 2012‚ and received CPI inflation-related increases since then‚ will in real terms pay 6% more in income tax this year. And then we have not even mentioned more unobtrusive taxes such as the increase of 42% in the fuel levy‚ higher carbon tax‚ inflation and various increases in import tariffs‚” Le Roux said.

Le Roux said it was not always easy to keep up with the numerous unobtrusive forms of taxation.

“Consider inflation and how it reduces your purchasing power. Even though it is technically not a form of taxation‚ it nonetheless impoverishes the public and enriches the state. ‘Inflation tax’ is a heavy burden: for instance‚ in 2014 your final salary for the year was worth 5‚3% less than your first.”

Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.