Some gems are found not in headlines but buried in less prominent text. Here’s one: “SA’s number of assessed taxpayers has fallen considerably over the last four-five years, moving from six million in 2013 to 4.7 million in 2017”.
That has staggering implications. Yet it passed almost unnoticed in a Business Maverick piece. So, even before the current climate of violence, tax revolt and emigration, the number of people who pay personal income tax (PIT) was dropping while the population increased. The way personal income taxpayers and their contributions are abused will accelerate this trend.
We may not reach the levels which inspired 18th-century American revolution slogans such as “No taxation without representation”, and “Taxation without representation is tyranny”. But many people are fed up. Monday’s Citizen story about ex-pats terminating their SA tax residency is part of this pattern.
Figures about who pays what tax are open to manipulation – “Lies, damned lies, and statistics”. How many assessed personal income taxpayers are carrying the burden now, if 4.7 million were doing so in 2017? Fin24 (February 22, 2019) said, “the latest National Treasury statistics report that … 82.6% of expected income tax collections for 2019-20 will be payable by only 2.1 million registered taxpayers”.
This core number will surely slip below 2.1 million in 2020-21 as the tax revolt and emigration continue. Simultaneously, the numbers of unemployed people and grant beneficiaries are growing. Since 2016, there have been more social grants than there are people with jobs.
The gap is widening. Fewer jobs, more grants. Churchill might have said, “Never was so much owed by so many to so few”. You can see where this is going. It’s not sustainable. But the equation is further tilted by the R600 billion public sector wage bill, which eats up 35% of government spending.
Can this be turned around? Not while the ANC is addicted to plunder. The party has been buying votes with taxpayers’ money, through social grants and overpaid public sector jobs. Although there has been talk about trimming the public sector wage bill, unions won’t allow that.
Corruption, endemic in the ANC and EFF, also bleeds the public purse, adding to the burden on the dwindling number of taxpayers. Whether you are stealing from Eskom, SAA, SABC, or VBS, it’s mostly public (taxpayers’) money.
With its majorities declining in successive elections, the ANC can’t afford to lose further support by shedding jobs or cutting grants. Yet we cannot afford to support so many dependants.
Personal tax is not the SA Revenue Service’s (Sars) only revenue source. But it accounted for 38.1% of total revenue in 2017-18. That’s the biggest single share. Other significant contributors are value-added tax which we all pay (24%), and corporate income tax (20%).
In a stagnant economy, Sars is struggling with revenue. Any further shrinking of personal tax will hurt. Yet instead of cherishing personal taxpayers, ANC secretary-general Ace Magashule and company prefer insults.
Add xenophobic attacks. Is there an agenda to make SA ungovernable? Some cadres specialise in ungovernability.