Johannesburg - Tax experts reckon South Africans are among the most heavily taxed people almost anywhere on earth.

In fact, Finweek calculated that some South Africans pay a tax rate of 60% even though the official top tax rate - known as the marginal tax rate - is 40%. This is owing to a myriad of hidden taxes.

Hidden taxes include the cost of health and security; travel taxes such as airport and toll road levies; import taxes; and the 10% property rate tax and VAT payable on water and electricity.

This is one of the findings contained in Finweek's latest cover story which also examines the viability of a potential increase in personal tax as mooted by Finance Minister Pravin Gordhan in September.

Such is the burden on South African consumers that individuals expect to pay more tax than first budgeted in the 2009 budget and certainly more than corporates - much more, in fact.

According to the budgeted figures released in February this year for the financial year ending in February 2010 it was estimated individuals and trusts would contribute R207.5bn (of total tax revenue of R659.3bn), whereas companies were budgeted to contribute R160bn.

Finweek said that currently, 25% of individual taxpayers pay 75% of all personal income tax, which contributes close to 30% of total revenue to the fiscus.

"That's massive in anybody's terms and needs. Individual taxpayers are also subject to value added tax (VAT), capital gains tax (CGT), donations tax, estate duty, transfer duties and un-certificated securities tax (UST), just to name a few.

"That takes their contribution way above 60% and an individual tax burden equal to more than half of annual personal consumption spending," Finweek said.

Carolyn Freeman, director of International Executive Services at KPMG, said that the marginal rate of tax in South Africa takes effect at a relatively lower income level than many other countries.

As a result, individuals in South Africa remain among the highest taxed worldwide. That means South Africa's marginal tax rate - the highest rate that can be paid - is applied at a lower income group in South Africa than that of other countries.

Said Freeman in an interview with Finweek: "So if I get paid R50 000 here in South Africa, I'll be taxed 40% on that, whereas if I were paid the equivalent in US dollars I'd only be taxed 28.9%."

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- Fin24.com