South African taxpayers are among the highly taxed in the world – and it could get worse. Economists say we will most likely see an increase in personal tax and the fuel levy, as government tries to ramp up tax collection. They say government is running out of options to raise money after SARS missed its collection targets over the past few years.
Analysts say it’s now a certainty that SARS will miss its collection target yet again.
Last year the revenue service missed its target by R57-billion. South Africa’s per capita economic growth remains negative, with the economy expected to grow by less than a percent this year, while the population has grown by 1.6 percent.
Corporate tax has plummeted over the last few years. And the recent increase in VAT is failing to close gap.
“We have to collect extra taxes and that’s the problem, so those extra taxes are more than likely to come from personal income tax which is also a high burden already,” says Eonomist, Mike Schussler.
Schussler says taxpayers are already paying more tax.
This, after government has deliberately not adjusted tax brackets to cater for inflation.
“That means more of their money goes to the taxman rather than spend on the same thing as they could before, so effectively they getting poorer and its as if a magic wand appeared called inflation and helps government but punishes the working class,” Schussler says.
He says government has raised R12-billion rand doing this. Given the dire financial position the country is in, how will Finance Minister Tito Mboweni finance this deficit?
Schussler says Mboweni can either increase taxes, cut spending, use our pension funds through prescribing assets, privatise some SOEs or borrow from the IMF.
“If you increase taxes, every taxpayer in the country will be screaming, you bring down spending in government services that will be a big problem.. and going to the IMF certainly the unions wont like that, privatising is not government policies.”
He says it can’t be business as usual and tough decisions have to be made.