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Pretoria – Middle- and high-income groups in South Africa
have for the past 10 years paid more than 40% of their gross income in taxes
and so-called invisible taxes. The trend is unlikely to change soon.
It might even increase, if the indirect taxes announced in
the recent budget speech are taken into account, said Unisa’s research team on
personal finance in reference to Finance Minister Pravin Gordhan’s budget.
The unit’s Johann van Tonder said that with this in mind,
government wonders why South Africans are not saving. "As taxes – and
especially invisible taxes – increase, the money that might be saved
diminishes."
The researchers also point out that in South Africa it has
become the practice to shift the costs of education, security and medical
expenses onto the consumer. These are all services government should provide,
but ones for which the consumer now has to pay. And municipal rates are not
included in this mix.
Now consumers are expected to pay for roads as well.
Although the minister announced income tax relief to the
tune of R9.5bn, most of this is directed at the lower-income groups.
Professor Jan Venter from Unisa’s tax department said that
the middle- and high-income groups are being increasingly expected to contribute
to the fiscus.
The fuel levy is rising by 20c/litre and the Road Accident
Fund levy by 8c/litre. This means petrol will soon go up by at least 28c/litre,
said Venter.
What is more, the electricity levy has risen 250% – and this without Eskom’s increases – which companies can, to a degree, pass on to the
consumer.
South Africa also has the unique problem that only about 6 million
out of a population of 50 million pay personal income tax, said Van Tonder.
Venter said that to date government’s biggest source of
revenue is from the supply of goods and services (about 36%), and in 2012/13
personal income tax will comprise 35% of government's total income.
By 2014 the latter is expected to be government’s major
source of income.
Van Tonder said that in 2007/08 government salaries, the
cost of government debt and grants together absorbed 54.8% of state revenue –
and in the 2012/13 financial year this will rise to 69.1%.
The relief announced in the budget, such as the provision
for the effects of inflation, benefits lower income groups the most.
For some high-income earners the saving is only 2.1%
compared with a saving of up to 72.5% for someone in the lowest income
category.
As far as capital gains tax is concerned, Venter said the
increase in the inclusion rate (from 25% to 33%) is “drastic” and prejudicial
to higher income earners. But this could be pushed up to 100% over the next
couple of years. (This means a person’s capital gains would be taxed at his
marginal rate.)
Changes to the handling of medical deductions, dividend tax
and retirement fund contributions also disadvantage high-income earners more
than those earning little, said Venter.
Venter said ways would have to be found to fund the national
health insurance system. Gordhan mentioned that government was already
considering increasing VAT, inter alia, but this Venter said was “less likely”.
Rather, the marginal rates for personal tax might be pushed
up, he said.
- Sake24
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