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Reason for e-tolls 'hilarious' - expert

Johannesburg - Residents of Gauteng are already paying the lion's share of South Africa's personal income tax and now they have to pay up even more due to e-tolls, reported SakeRapport.

Paul Joubert, a researcher at Solidarity's research institute, said in South Africa tax rates - VAT and personal income tax - are perhaps not as high as in some countries in the Western world, but the net tax burden is higher here.

"In countries such as Germany the rates may be higher, but people who pay taxes get something in return," he said.

"In South Africa, the net tax burden for people who pay taxes are heavier, because they might not get much for the taxes they pay."

The approximately 3 million South Africans who contribute most to the state's income in the form of taxes are also the ones who do not make use of most of the services for which the money is used, said Joubert.

Then they also have to pay e-tolls, but Joubert said the main reason for opposition to the e-toll system should be because it appears that this is a very inefficient way to recover construction and maintenance costs of the upgraded Gauteng highways. A large part of the toll money will go to the administration of e-toll collection.

"This is in contrast to recovering the cost of roads, as has been done previously, from the treasury in general, or to use a specific fuel tax for this purpose," said Joubert .

Both of these options have no additional administrative costs.

Joubert said the government claims that it would be unfair to expect people who do not use the Gauteng highways to pay for it and therefore these two options are not suitable.

The principle of "user pays" is a good one, but that the government supports the principle is "actually hilarious", according to Joubert.

"The tax system is actually used for taxpayers to pay for a lot of things they do not use, so other people could use things for which they did not pay, but apparently Gauteng's highways are suddenly an exception," said Joubert.

Tax statistics show that most tax that the state collects are paid by less than 60% of taxpayers nationwide.

South Africans definitely experience a tax overload, said Mike Schüssler, an economist at Economists.co.za. About 30 cents in every rand of South Africans go to some form of taxation and e-tolls are just another form of taxation, he said .

For the 2012 tax year, there were about 5.1 million taxpayers (those who had submitted returns and and had to pay tax) and a bit more than 40% of these people live in Gauteng.

Last year 42.7% of taxpayers contributed only 3% of the tax.

This means about 3 million people pay 97% of the taxes. Gauteng pays the most and was responsible for R104.2bn, or 50.4% of the assessed tax last year.

But South Africans across the country are burdened by the taxes they must pay.

These include personal income tax, capital gains tax, property tax, value added tax (VAT), excise duty, fuel charges, electricity charges, the levy on plastic bags and carbon tax. Now e-tolling in Gauteng has been added as well.

According to the 2013 tax statistics assessed taxpayers had a total taxable income of R1 000bn and a tax liability of R206.7bn. This means an average tax rate of 20.2%.

"The big problem (with e-tolls) is that they reduce people's discretionary, or disposable, income," said Schüssler.

The average person (in the formal sector) earns around R14 700 a month and after personal income taxes, medical and pension deductions he has just under R11 000 left. Then he has to pay things like his bond, put petrol in his car and buy food and this leaves him with about R2 500 per month, he said.

"Even if your e-tolls are only R100 per month, it is still a big part of your disposable income. And if you do not have an e-tag, it could be more, "said Schüssler.

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