I find taxes quite taxing
As a law-abiding and economically active South African, I am obliged to support my government and the Fiscus by paying my fair share of income tax. Unfortunately for me (read us) income tax is not the only area where the government gets its proverbial pound of flesh.
Here is a decently long list provided by SARS that details the various taxes and levies within South Africa.
After you have lost your soul in reading through all the technical and mind-numbing jargon it becomes pretty clear that income tax is really only one area in which I am (read: we are) funding our South African government.
Let’s have a closer look at the big ones (including income tax) and how it affects your contribution to the South African Fiscus.
Income Tax
The devil is certainly in the detail here. Especially with so many different brackets coming into play, depending on your income level.
So let’s assume you are on the low threshold of the 39% bracket.
Taxable income for the year: R 613,601.04
Tax you will pay / PAYE (Pay As You Earn) for your age group and income bracket: R 12,301.78 (as per PAYE tables provided by SARS)
Take home pay = Gross salary — PAYE — UIF
(UIF / Unemployment Insurance Fund is levied at 1% of your gross income, at most R177.12/month.)
Take home pay = R 51,133.42 — R 12,301.78 — R 177.12
Take home pay: R 38,654.52 per month
VAT
Now that you have money in your bank; surely that means that you are done, right? Well, no. Next, we need to understand what you do with that money in your bank.
We are going to assume a few things here. The first is a breakdown of what you do with that money.
- Savings — R 10 000 (tax will apply to this later when you use it!)
2. Spending — R 20 000
3. Fuel — R 8000
So let’s focus on the “spending” portion. That R 20 000, generally, is going to attract VAT. Sure there are some exceptions like bread, milk etc. but, by and large almost everything you buy has a 15% VAT portion.
That means that of the R 20 000 you have spent; R 3 000 has gone to the government. So if we look at what R 3000 is of your monthly gross salary it works out to around 5.9%
Travel and Road Levies / Taxes
So while fuel is not one of those VAT exempt items; it is certainly not devoid of attracting its own fun form of taxes; and boy are there a lot of those attached to fuel!
Road Accident Fund and the Fuel Levy form part of the price of the fuel that you put in your tank.
So let’s assume the R 2000 as above was dedicated for fuel. At today’s price for inland 95 unleaded (R 16.32/L ); R 2 000 would get 122.5 litres.
Fuel levy is currently at R 3.77 per litre
Road Accident Fund is at R 2.07 per litre
VAT will be at R 2.45 per litre
Together these come to R 8.29 per litre; that’s 50.8% of every litre of fuel that you buy.
Okay; so of the 122.5 litres that you filled up this last month; R 1015.53 went to levies and VAT. So this means that of your total salary, an additional 2% goes to the government.
Don’t even get me started on eToll and other toll gate charges. For the sake of simplification, I am going to assume that all is right with the world and we don’t have to foot the bill for those as well!
So using these as the benchmarks and taking the salary we declared above; effectively it is not just the 39% income tax we have to pay; but rather 46.9, let’s call it 47% of our total income has been donated to the South African government on an average month.
Of course, if you are unlucky enough to earn more, pushing you to the top bracket; the total tax rate is closer to 53% (that’s more than HALF of your total earnings!)
What makes this even more shocking, and I guess ultimately “unfair” is when you see articles like this recent MoneyWeb article from early March 2021 which quotes Econometrix chief economist and director Azar Jammine as saying:
5.8% of the population is paying about 92% of all personal tax
That is a pitifully small group (roughly 3 400 000 people) who are also paying about 85% of the VAT in the country.
This, in a country that is woefully in debt, is still issuing grants and green-lighting massive government expenditure (albeit some needed and critical). A country where the SOE’s are being bailed out faster than the Titanic. A country where Load Shedding and illegal electricity connections are commonplace. A country where Municipalities are bankrupt and roads are in a pitiful state of disrepair.
If we were able to reap the rewards of what our hard-earned Tax Rands were intended for; if we were able to increase tax revenue collections; not from the few who are bleeding; but rather from the 55 000 000 who are largely extracting from the Fiscus faster than it can be replenished.
Sadly we need to stop the bleeding of where the Fiscus is hemorrhaging money from some of the below before we can even think about how to add more money into the equation:
- Blatant corruption;
- The ongoing state capture saga;
- The continued bailouts and the huge inefficiencies of SOEs;
- Eskom’s reliance on coal and the gross mismanagement resulting in load shedding;
- The ongoing narrative around expropriation of land without compensation, nationalising the SA Reserve Bank (SARB);
- and so the list goes on…
