Big tax hikes coming in South Africa

Swa

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Would it be fair to say that residual effects from the Zuma era has spilled into CRs reign?
One aspect of it yes. Squirrel knew what he was taking on but he doesn't have the balls to do it. It's still not him in control but the rest of the corrupt cadres. He should have put his foot down when he became president. He was elected their leader ffs so he should be leading. Let them fight it out then at least he has a chance of surviving instead of trying to save this rotten ship that is the ANC. Now he will go down with the ship that is the country.

I would go beyond austerity measures at this point... 2 years ago austerity would have been a viable solution.

At this point we need to go through 2 or 3 years of public service large scale job shedding pain and right sizing, before light can be seen at the end of the tunnel. Everything government does needs to drop by comfortably 20% of its current cost.

As middle class people most of us can muddle along, I have meat in my budget to trim quite a chunk out of what I spend every month if needs be.... the poor don't, and this is hitting them the hardest in the short to medium term.
That's one way to look at it. Every year however they choose to subsidise the poor even more with increased grants so they aren't the ones really feeling it. It's us lower middle class that are already cutting out essentials that are feeling most of it.
 

Swa

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The key underlying issue is lack of economic growth, in fact possibly even a shrinking economy, which is exacerbated by ballooning debt. And for as long as the economy is stagnant or declining, there is no way that increasing taxes will have any effect other than retarding economic growth even more, resulting in a declining curve of revenue.

I think anyone with even half a brain can rattle off the well known reasons why the economy is in the toilet: - Uncertainty on property rights, over-regulation, a prevailing political ideology hostile to business interests, rampant unions, violent crime, abysmal education, ongoing, unbridled and unprosecuted corruption from the highest levels down, not to mention failing power and water infrastructure due to a combination of other reasons.

It is a surreal situation where most sensible people who pay attention to the news and have some modicum of understanding of how the world works, can only stand by and watch the political establishment double down on all this disastrous policy that they must, at some level, know is the cause of the decline.
Dawie Roodt was speaking yesterday where he said the economy would probably be 10% larger is it wasn't for Eskom. It may not be technically declining but then electricity usage is at a low and has only been declining. That doesn't correlate with a growing economy so somewhere something has shifted and I think we're having the wool pulled over our eyes with "technicals".

Also you'd think the last bit is true then we've had people on this forum knowing what's going on saying that if it looks like the ANC will lose they'll vote for them to keep them strong. WTF, a strong ANC is exactly the problem we are sitting with and "punishing" them 2 years ago didn't help. This is why democracy has never worked anywhere in sub-Saharan African. The only successes were under colonial rule.

Serious question: What are the factors that result in that steep drop in 2019? It would be useful to see the revenue and spending separately.
R20bn budget deficit. Not in itself an issue but in all likelihood they already spent that money which then never arrived.
 

ToxicBunny

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That's one way to look at it. Every year however they choose to subsidise the poor even more with increased grants so they aren't the ones really feeling it. It's us lower middle class that are already cutting out essentials that are feeling most of it.
Yes we are appreciably feeling it by cutting out luxuries and shifting what essentials we get... but the middle class (and the real middle class that is) can still survive month to month, the poor are getting pushed further and further off thecliff
 

envo

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"the government will either have to cut spending or increase taxes " - increase in taxes it is I guess
 

krycor

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I would tend towards increasing vat to 20%, and decreasing PIT by an amount...

It would play with peoples psychology, in that they FEEL they will have more money and generally be happier because their bank balance looks better after payday.
My thought is along this line.. ie

Increase VAT to 16-20% (16% on food). Where goods are locally produced or largely made in SA vat % is lower. This means food is still relatively less taxed and other things normalize with peers, encourages buying local.

Decrease CIT to 20-28% pending use of local manufacture, % local employees etc. ie encourage use of locals & local resourcing. Since they have employee data, this is a matter of administration. (Current is 28%). Investigate/introduce tax free zone/ports for local manufacture and export without tax hit.

PIT stays exactly where it is.
 

ToxicBunny

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My thought is along this line.. ie

Increase VAT to 16-20% (16% on food). Where goods are locally produced or largely made in SA vat % is lower. This means food is still relatively less taxed and other things normalize with peers, encourages buying local.

Decrease CIT to 20-28% pending use of local manufacture, % local employees etc. ie encourage use of locals & local resourcing. Since they have employee data, this is a matter of administration. (Current is 28%). Investigate/introduce tax free zone/ports for local manufacture and export without tax hit.

PIT stays exactly where it is.
Yeah no...

Thatb will still leave them on the wrong side of the Laffer curve... Pit needs to come down actually.

And having multiple vat rates will just be a admin nightmare.
 

smi

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My thought is along this line.. ie

Increase VAT to 16-20% (16% on food). Where goods are locally produced or largely made in SA vat % is lower. This means food is still relatively less taxed and other things normalize with peers, encourages buying local.

Decrease CIT to 20-28% pending use of local manufacture, % local employees etc. ie encourage use of locals & local resourcing. Since they have employee data, this is a matter of administration. (Current is 28%). Investigate/introduce tax free zone/ports for local manufacture and export without tax hit.

PIT stays exactly where it is.
I'd rather pay more for certain international items than locally made cr4p. Just need to find a way to find better quality building maintenance workers
 

RedViking

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Feb 23, 2012
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And to think I actually returned here after 15 yrs overseas...for a few reasons which are now long lapsed.
It took me time understandably, to fully comprehend the level of corruption and endemic state failure that has permeated all levels of society and services...2.5 yrs...but now my fate is sealed.

Fortunately,unlike most SA's I have another passport to a 1st world country, and to leave this sorry mess behind.
Go. Farewell.
 

FlashSA

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I too would rather choose an increase in Vat. As someone in business, I can then choose to absorb the increase on certain sales so as not to lose certain deals/sales and the increase in input vat gets claimed back anyway.

I also support taxing the hell out of sin items - cigarettes, cigars and booze. Hell, moer the sugar tax too - one can adapt and do without to avoid the extra charges. I really feel more staples should be added to the zero rated basket, like meat and all diary. But of course they won't because those are their cash cow products, excuse the pun.

But leave PAYE and Fuel alone - they are already over the max IMO.
 

koffiejunkie

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Besides the fact that government really should be spending less, particularly on the public sector, raising taxes isn't the only other option. What they really should be focusing on is expanding the tax base. Particularly, formalising the informal economy. This may sound like a tall order, but I think in a country where theft is a huge issue, incentivising cashless payment methods will go and awful long way.

For example, pick payment device (RFID card or whatever). Bonus points if it has some simple authentication scheme that will make it worthless to anyone but the owner. Incentivise the taxis to take it as a payment. Maybe in exchange for a fuel subsidy or whatever. Now you have an audit trail of the transactions and can tax it efficiently.

OK ok, taxis are probably the hardest nut to crack, but this could be easily done for informal/roadside shops.

The other thing government really should be doing is incentivising high-tech manufacturing. In the bad old days SA made just about everything. We still produce cars and other sophisticated machinery. We should be looking at becoming and alternative manufcaturer to China for things household electronics, mobile phones, etc. Figure out which supply chains need to exist for the network effect to take hold and go after it with a club.
 

Gaz{M}

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Cancel minimum wage and labour laws for small businesses <50 people.

Watch employment skyrocket.

Imagine if you could employ 10 people at R1000 a month, instead of 2 people at R3500 each a month.

Bargaining unit deals should NOT apply to small businesses.
 

Johnatan56

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Cancel minimum wage and labour laws for small businesses <50 people.

Watch employment skyrocket.

Imagine if you could employ 10 people at R1000 a month, instead of 2 people at R3500 each a month.

Bargaining unit deals should NOT apply to small businesses.
No, R3500 for a full time job is already quite meager, and there are already incentives where government basically covers a portion of the wage if between 20-29yo to help make it easier to hire unskilled.
 

Supervan II

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No, R3500 for a full time job is already quite meager, and there are already incentives where government basically covers a portion of the wage if between 20-29yo to help make it easier to hire unskilled.
Ah, the unskilled and uneducated 30-percenters that you will have to give preference to for the jobs you offer? :laugh:
 

newby_investor

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No, R3500 for a full time job is already quite meager, and there are already incentives where government basically covers a portion of the wage if between 20-29yo to help make it easier to hire unskilled.
Are there though? I seem to recall the DA wanted to implement something like that but the ANC kept stonewalling.

So what about the other eight people who could have gotten R1000? It's a very low wage but I'll tell you what, zero is even lower.
 

johnjm

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Are there though? I seem to recall the DA wanted to implement something like that but the ANC kept stonewalling.

So what about the other eight people who could have gotten R1000? It's a very low wage but I'll tell you what, zero is even lower.
The employee tax incentive scheme. It's been around for years now.
 
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