SA has run out of taxpayers, says Dawie Roodt

[CommonSense]

You are not understanding the wider economic fundamentals. When the only sector growing is the public sector while the private sector is shedding jobs that cannot be referred to as healthy. Put lipstick on a pig and it is still a pig. If this month government employed another 100,000 public sector employees funded by even further debt you could not then celebrate the increase in tax revenue from those 100,000 new taxpayers. Or are you saying that you would call that an economic success story?

Your example is actually good. If I build a mop factory and sell 5,000 wooden handled mops to the Department of Public Works @ R200,000 per mop. Then my company pays tax then is that increased tax revenue something you would celebrate as an economic success?

You have to recognise that while you are being scammed by a governing criminal cartel then the numbers are not very credible once you dig deeper. The wider economic situation confirms the rot. You must have noticed the resulting issues? Even the ANC government recognises the problem they created by governing in such a short-sighted manipulative manner in order to gain votes. They just keep kicking the can down the road.

Let me preface my response with: I freely admit that I have not studied economics to any depth at all, so I will have to defer to the knowledge of those in the field and accept that my views would not be seen as 'fitting the general consensus'.

That said, I do believe (and I again accept that I might be totally wrong on this too) that I have a modicum of reasoning faculties which has stood me in good stead so far in my life. Might get me into trouble at times, but that is part of life and we all strive to learn as we travel through life together on this planet.

I acknowledge your reply and accept that it is a valid view from a particular viewpoint, but you have to allow me to explain my contrarian opinion.
I had to get some sleep so was unable to put together a coherent reply last night and thus left it for this morning. I realized that it might become a lengthy reply.

It seems to me that the whole situation depends on the level at which one is looking at the economy. Whether is it widely focused or very narrow focused.

I propose the following:

Point 1:
Everyone living in South Africa is part of the economy, whether the formal or the informal.
The formal sector is clear for all, the informal sector not so much.

The informal sector helps the economy in that they are also consumers of products the formal sector delivers, and by doing so they also contribute tot he fiscal income of the state by means of VAT.

Even Taxi drivers contribute to the economy be consuming fuel and other products and also to deliver those who work in the formal sector to their respective areas.

The point with this is that the economy should not be looked at only narrowly by defining tax payers as only a minority who contributes TAX revenue in the very narrow definition which was proposed.

Point 2:
My second point is a counter to the idea that public sector workers (formal economy) is not TAX payers and that their PAYE "is not the same as others".
As I understand the reasoning is that the PAYE which is deducted from public servants at all levels of overnment, should not be counted as part of the TAX base.

My logic tells me that view is absurd (IMHO).

If that view is accepted by economists in general and the general public should then understand that the Salary of government workers is much less than that of the private sector as you need to deduct the PAYE they have to pay back to their employer as they never receive that.

So the salary of all public servants are less by the corresponding tax rate they happen to fall into when PAYE is deducted from thier salaries.

Point 3:
The third point I want to make is this: You have direct contributions to the economy, as in the example you espoused on after my previous reply.
That is a direct contribution to the economy in that a phyical material or a service is rendered which others consume and various TAXES are paid on that product/service.

But, you also have to understand that in order for the private secor to be able to deliver those services, you need a public sector which indirectly contributes towards the output of that product/service.

How - what madness? Well, in order for the private sector to deliver said goods and services they need to make use of the roads and infrastructure which, although in most cases is constructed by the private sector on behalf of the government, it needs to be maintained and looked after in the medium/long term by public servants.

I realize that you can counter somewhat by saying public servants don't do all the maintenance themselves and again uses the private sector to do that, but you have to agree that that is not the case at all times.

Public servants do maintain and keep infrastructure operational and are the ones who monitors and informs the private sector where work is required.

So infrastructure can be fully maintained by public servants at times, but other times it is a co-operation between public/private parties and there are cases when it is purely private entities.

The public service also contributes to the economy then by facilitating the private sector and by providing that service they are compensated by direct payments, but also by TAX revenue.


My main point thus is: Even though the public service employees don't "make" physical products in most cases, they do deliver a service and you would be hard pressed to convince me of the difference between providing a service by a private entity and providing a service by a public servant. In both case a worker needs to be paid for that service and that worker is then taxed at the appropriate PAYE rate.

Hence my submission is that the public service employees who have PAYE deducted from their salaries must also be seen as part of the TAX base and as contributing to the economy.

I am sure that you will agree with me that the Utopias of Thomas More, Francis Bascon, Henry Neville and dare I say Gene Roddenberry will probably never exist in human society. Non-human societies (intelligent or non) might develop a society where the contribution of everyone is unquestioned and part of the whole. We, never, the greed and inhumanity of the human race will not allow that. No amount of evolution will ever remove that from our gene pool.

EDIT REASON: Had to fix some spelling and formatting mistakes as the text was posted before I could fix it.

 

[CommonSense]

So their PAYE isn't paid by tax money.


No, more like a company who's revenue is derived from selling to its employees. It's an unsustainable practice of feeding on itself. Government money can only come from two places, tax revenue or borrowing. In the case of government employees it can't come from taxes because that's already from government money... but apparently you know better.


Most countries do not have such a bloated public sector that has been used to try and hide the job losses due to the government's ill policies and inefficiencies.

I never claimed that I knew better. I just disagree with your view. I explained it in my reply to Milano.

We might not be able to agree on this topic as it would probably depend on which model one has a core belief in.

I agree with you that a large public sector without a healthy private sector is not sustainable. There needs to be a balance and the Private sector does indeed need to be much larger than the private public sector.

But we have seen even power governments using 'unique' methods such as Quantitative easing (QE) and massive infrastructure projects to kick-start their economies. We still need to see the long-term effects of this play out fully.

It might work, it might not.

You have to also admit that any scientific model should be open to re-examination in order to determine if it is still applicable and that would be the case for an economic model as well.

EDIT REASON: Changed the obvious typo in the sentence above from private to public, otherwise it would not have made sense would it?

 

[Milano]

Let me preface my response with: I freely admit that I have not studied economics to any depth at all, so I will have to defer to the knowledge of those in the field and accept that my views would not be seen as 'fitting the general consensus'.

That said, I do believe (and I again accept that I might be totally wrong on this too) that I have a modicum of reasoning faculties which has stood me in good stead so far in my life. Might get me into trouble at times, but that is part of life and we all strive to learn as we travel through life together on this planet.

I acknowledge your reply and accept that it is a valid view from a particular viewpoint, but you have to allow me to explain my contrarian opinion.
I had to get some sleep so was unable to put together a coherent reply last night and thus left it for this morning. I realized that it might become a lengthy reply.

It seems to me that the whole situation depends on the level at which one is looking at the economy. Whether is it widely focused or very narrow focused.

I propose the following:

Point 1:
Everyone living in South Africa is part of the economy, whether the formal or the informal.
The formal sector is clear for all, the informal sector not so much.

The informal sector helps the economy in that they are also consumers of products the formal sector delivers, and by doing so they also contribute tot he fiscal income of the state by means of VAT.

Even Taxi drivers contribute to the economy be consuming fuel and other products and also to deliver those who work in the formal sector to their respective areas.

The point with this is that the economy should not be looked at only narrowly by defining tax payers as only a minority who contributes TAX revenue in the very narrow definition which was proposed.

Point 2:
My second point is a counter to the idea that public sector workers (formal economy) is not TAX payers and that their PAYE "is not the same as others".
As I understand the reasoning is that the PAYE which is deducted from public servants at all levels of overnment, should not be counted as part of the TAX base.

My logic tells me that view is absurd (IMHO).

If that view is accepted by economists in general and the general public should then understand that the Salary of government workers is much less than that of the private sector as you need to deduct the PAYE they have to pay back to their employer as they never receive that.

So the salary of all public servants are less by the corresponding tax rate they happen to fall into when PAYE is deducted from thier salaries.

Point 3:
The third point I want to make is this: You have direct contributions to the economy, as in the example you espoused on after my previous reply.
That is a direct contribution to the economy in that a phyical material or a service is rendered which others consume and various TAXES are paid on that product/service.

But, you also have to understand that in order for the private secor to be able to deliver those services, you need a public sector which indirectly contributes towards the output of that product/service.

How - what madness? Well, in order for the private sector to deliver said goods and services they need to make use of the roads and infrastructure which, although in most cases is constructed by the private sector on behalf of the government, it needs to be maintained and looked after in the medium/long term by public servants.

I realize that you can counter somewhat by saying public servants don't do all the maintenance themselves and again uses the private sector to do that, but you have to agree that that is not the case at all times.

Public servants do maintain and keep infrastructure operational and are the ones who monitors and informs the private sector where work is required.

So infrastructure can be fully maintained by public servants at times, but other times it is a co-operation between public/private parties and there are cases when it is purely private entities.

The public service also contributes to the economy then by facilitating the private sector and by providing that service they are compensated by direct payments, but also by TAX revenue.


My main point thus is: Even though the public service employees don't "make" physical products in most cases, they do deliver a service and you would be hard pressed to convince me of the difference between providing a service by a private entity and providing a service by a public servant. In both case a worker needs to be paid for that service and that worker is then taxed at the appropriate PAYE rate.

Hence my submission is that the public service employees who have PAYE deducted from their salaries must also be seen as part of the TAX base and as contributing to the economy.

I am sure that you will agree with me that the Utopias of Thomas More, Francis Bascon, Henry Neville and dare I say Gene Roddenberry will probably never exist in human society. Non-human societies (intelligent or non) might develop a society where the contribution of everyone is unquestioned and part of the whole. We, never, the greed and inhumanity of the human race will not allow that. No amount of evolution will ever remove that from our gene pool.

EDIT REASON: Had to fix some spelling and formatting mistakes as the text was posted before I could fix it.

There are points there that may well be worth discussing in a more general thread about the advantages and disadvantages of state intervention (or interference) in different economies globally. However this thread is about SA.

When the ANC government itself admits that the civil service is bankrupting SA and that salaries cannot be met across the civil service including failures to meet salaries at SOE's like Denel, SAPO, Eskom, and so forth without taking on massive debt, then I cannot see what is left to discuss at that point.

Going forward the ANC government's plan to save SA almost solely relies of its 'plan' to freeze further increases in the bloated civil service size and remuneration. That is the official admission that the ridiculously oversized civil service that has enjoyed increases that are ludicrous when compared to revenue continues to destroy the SA fiscus.

This presents the ANC with a huge identity-crisis issue as the ANC is essentially a labour union. Labour unions have no experience or political will to limit the endless demands of labour.

Naturally there is no evidence that the ANC will succeed even in that very diluted attempt to address the disaster they have knowingly created. Of course that is but just one of their huge number of governing failures. One cannot overstate the role it played in running the economy into the ground but it should not detract from the other disastrous policies or the huge scope of corruption.

Naturally there is nothing wrong with a lean efficient public service that meets the needs and budget constraints of a country. But we are talking about SA where it is anything but lean, efficient or within budget.

 

[Sinbad]

My second point is a counter to the idea that public sector workers (formal economy) is not TAX payers and that their PAYE "is not the same as others".
As I understand the reasoning is that the PAYE which is deducted from public servants at all levels of overnment, should not be counted as part of the TAX base.

My logic tells me that view is absurd (IMHO).

If that view is accepted by economists in general and the general public should then understand that the Salary of government workers is much less than that of the private sector as you need to deduct the PAYE they have to pay back to their employer as they never receive that.

So the salary of all public servants are less by the corresponding tax rate they happen to fall into when PAYE is deducted from thier salaries.

Your logic is flawed.

The fact is, the entirety of the public sector's salary bill comes from taxpayer money. The money they give back to the fiscus through tax is a lot less than the money they withdrew from the fiscus through salaries. Therefore, they do not contribute any meaningful tax revenue to the country - they are a net drain.

Maybe you misunderstand "public sector"? By this, we mean employees of the state. We can stretch this to many state-owned-entities too, give the frequency and magnitude of taxpayer-funded bailouts.

 

[itareanlnotani]

My goto answer for this is the Zim guy that wrote "Who pays South Africa's taxes", and its follow up.

See rollingalpha.com for both posts. Note that we have even less *actual* taxpayers than when he wrote those posts.

The first link; other one is on his site.

Who Pays South Africa’s Tax – Rolling Alpha

 

[CommonSense]

Your logic is flawed.

The fact is, the entirety of the public sector's salary bill comes from taxpayer money. The money they give back to the fiscus through tax is a lot less than the money they withdrew from the fiscus through salaries. Therefore, they do not contribute any meaningful tax revenue to the country - they are a net drain.

Maybe you misunderstand "public sector"? By this, we mean employees of the state. We can stretch this to many state-owned-entities too, give the frequency and magnitude of taxpayer-funded bailouts.

What you are forgetting is that the Public sector by the services they render is an enabler of the Private sector.
And the public sector needs to be reimbursed for that service, hence TAX.

O yes, a private company will build something like the Gauteng Freeway project and then allow everyone to use it for free? I don't think so. They will make their profit from the freeway and provide handsome dividends to their shareholders.
Most roads in SA (Urban and most long distance freeway) is "not tolled directly". The service is rendered by the public sector and the upkeep and payment for its use is through tax.

I am fully aare of the public sector consisting of the three spheres of government (National, Provincial and Local) as well as correctly by extension, the SOEs.

What a lot of people also seem to be clouding their opinions is the public sector is seen as purely wasteful due to corruption. But what they forget is that corruption has two sides of the equation. The one side is the public purse side, but the other side is the Private side. It is private companies who benefit from the corruption. Registered as such (private) on Cipro order to do business with public entities.
One example: 2010 World cup construction collusion and corruption:

The Many Faces of Corruption in South Africa | Centre for Criminology

www.criminology.uct.ac.za

But I fear we are digressing. Point being, that you should not only look at the finance burden of the public sector, you should look at the services portion too to make an educated informed decision on the value of the public sector.

Again, if there was no corruption (between public and private entities) would we be thinking the public sector per-se is just a drain?

South Africans seems to have a an ability to just display binary thinking. It is either this or that, there can be no in-between. An intellectual person should be able to see that all situations have a pro and a con:

The failure to understand that subtlety leads to this: "“I didn't say anything like that. Colonnialism (sic) was terrible. But its legacy is not only negative. If you can't tell the difference between those two statements, I feel sorry for you.”

 

[Sinbad]

What you are forgetting is that the Public sector by the services they render is an enabler of the Private sector.
And the public sector needs to be reimbursed for that service, hence TAX.

O yes, a private company will build something like the Gauteng Freeway project and then allow everyone to use it for free? I don't think so. They will make their profit from the freeway and provide handsome dividends to their shareholders.
Most roads in SA (Urban and most long distance freeway) is "not tolled directly". The service is rendered by the public sector and the upkeep and payment for its use is through tax.

I am fully aare of the public sector consisting of the three spheres of government (National, Provincial and Local) as well as correctly by extension, the SOEs.

What a lot of people also seem to be clouding their opinions is the public sector is seen as purely wasteful due to corruption. But what they forget is that corruption has two sides of the equation. The one side is the public purse side, but the other side is the Private side. It is private companies who benefit from the corruption. Registered as such (private) on Cipro order to do business with public entities.
One example: 2010 World cup construction collusion and corruption:

The Many Faces of Corruption in South Africa | Centre for Criminology

www.criminology.uct.ac.za

But I fear we are digressing. Point being, that you should not only look at the finance burden of the public sector, you should look at the services portion too to make an educated informed decision on the value of the public sector.

Again, if there was no corruption (between public and private entities) would we be thinking the public sector per-se is just a drain?

South Africans seems to have a an ability to just display binary thinking. It is either this or that, there can be no in-between. An intellectual person should be able to see that all situations have a pro and a con:

The failure to understand that subtlety leads to this: "“I didn't say anything like that. Colonnialism (sic) was terrible. But its legacy is not only negative. If you can't tell the difference between those two statements, I feel sorry for you.”

I agree that the public sector are enablers. I never said they must be eliminated. However, it's very much a fallacy to believe that expanding employment in the public sector will contribute anything to tax revenue in the country. The state being the employment agency/broker for the unemployed is just not productive at all - ESPECIALLY given the levels of inefficiency involved.

 

[The_Librarian]

However, it's very much a fallacy to believe that expanding employment in the public sector will contribute anything to tax revenue in the country.

100% this!!!

Govt should rather abolish BEE and allow the private sector to operate without constraints (illegal activities NOT included or allowed).

 

[D tj]

This thread has provided proof of the dictum : Common sense is not at all common.

 

[Ancalagon]

I never claimed that I knew better. I just disagree with your view. I explained it in my reply to Milano.

We might not be able to agree on this topic as it would probably depend on which model one has a core belief in.

I agree with you that a large public sector without a healthy private sector is not sustainable. There needs to be a balance and the Private sector does indeed need to be much larger than the private sector.

But we have seen even power governments using 'unique' methods such as Quantitative easing (QE) and massive infrastructure projects to kick-start their economies. We still need to see the long-term effects of this play out fully.

It might work, it might not.

You have to also admit that any scientific model should be open to re-examination in order to determine if it is still applicable and that would be the case for an economic model as well.

Um, while economists differ in their beliefs on things like monetary policy, I don't think any of them will agree with you here.

A bloated public sector is a bloated public sector. There is no way around it.

The money that the ANC spends on salaries comes right back to it, in the form of PAYE and VAT. Some of it is kept by the public sector employees, who may have a small effect on businesses, such as petrol stations and grocery stores. In exchange, some of the government functions are performed, although not well.

Look at the difference in public/private between SA and virtually any first world country. They have much smaller public sectors and much larger private sectors.

The public sector is really a jobs program, created to give jobs to people, to hide how bad unemployment really is. That is what this public sector program is.

 

[The_Librarian]

Do tell me... where will the government get the money for salaries to pay their public workers if the taxpayer stops paying tax? This includes tax on salaries, tax on savings etc...

 

[Ancalagon]

What you are forgetting is that the Public sector by the services they render is an enabler of the Private sector.
And the public sector needs to be reimbursed for that service, hence TAX.

O yes, a private company will build something like the Gauteng Freeway project and then allow everyone to use it for free? I don't think so. They will make their profit from the freeway and provide handsome dividends to their shareholders.
Most roads in SA (Urban and most long distance freeway) is "not tolled directly". The service is rendered by the public sector and the upkeep and payment for its use is through tax.

I am fully aare of the public sector consisting of the three spheres of government (National, Provincial and Local) as well as correctly by extension, the SOEs.

What a lot of people also seem to be clouding their opinions is the public sector is seen as purely wasteful due to corruption. But what they forget is that corruption has two sides of the equation. The one side is the public purse side, but the other side is the Private side. It is private companies who benefit from the corruption. Registered as such (private) on Cipro order to do business with public entities.
One example: 2010 World cup construction collusion and corruption:

The Many Faces of Corruption in South Africa | Centre for Criminology

www.criminology.uct.ac.za

But I fear we are digressing. Point being, that you should not only look at the finance burden of the public sector, you should look at the services portion too to make an educated informed decision on the value of the public sector.

Again, if there was no corruption (between public and private entities) would we be thinking the public sector per-se is just a drain?

South Africans seems to have a an ability to just display binary thinking. It is either this or that, there can be no in-between. An intellectual person should be able to see that all situations have a pro and a con:

The failure to understand that subtlety leads to this: "“I didn't say anything like that. Colonnialism (sic) was terrible. But its legacy is not only negative. If you can't tell the difference between those two statements, I feel sorry for you.”

No, the public sector is not a drain just be virtue of being public. It isn't a drain in the UK, and it isn't a drain in SA.

The South African public sector, however, is a drain. It is 3-4 times bigger than it needs to be, and costs, I don't know, many times more than it should cost. The services it delivers are subpar - if you even get service at all. In fact, the public sector is so bad that the South African public sector is not an enabler of business, but an OBSTACLE.

Not all public sectors, just the South African one.

Expanding the public sector is not the answer. Retrenching people en masse and having service level requirements, and getting rid of corruption is.

Also, where corruption occurs entirely in the private sector, its usually market collusion. When corruption occurs in the public sector, or between the public and private sector, that's ANC.

 

[Brenden_E]

This thread has provided proof of the dictum : Common sense is not at all common.

CommonSense is sus...

 

[Milano]

What you are forgetting is that the Public sector by the services they render is an enabler of the Private sector.
And the public sector needs to be reimbursed for that service, hence TAX.

O yes, a private company will build something like the Gauteng Freeway project and then allow everyone to use it for free? I don't think so. They will make their profit from the freeway and provide handsome dividends to their shareholders.
Most roads in SA (Urban and most long distance freeway) is "not tolled directly". The service is rendered by the public sector and the upkeep and payment for its use is through tax.

I am fully aare of the public sector consisting of the three spheres of government (National, Provincial and Local) as well as correctly by extension, the SOEs.

What a lot of people also seem to be clouding their opinions is the public sector is seen as purely wasteful due to corruption. But what they forget is that corruption has two sides of the equation. The one side is the public purse side, but the other side is the Private side. It is private companies who benefit from the corruption. Registered as such (private) on Cipro order to do business with public entities.
One example: 2010 World cup construction collusion and corruption:

The Many Faces of Corruption in South Africa | Centre for Criminology

www.criminology.uct.ac.za

But I fear we are digressing. Point being, that you should not only look at the finance burden of the public sector, you should look at the services portion too to make an educated informed decision on the value of the public sector.

Again, if there was no corruption (between public and private entities) would we be thinking the public sector per-se is just a drain?

South Africans seems to have a an ability to just display binary thinking. It is either this or that, there can be no in-between. An intellectual person should be able to see that all situations have a pro and a con:

The failure to understand that subtlety leads to this: "“I didn't say anything like that. Colonnialism (sic) was terrible. But its legacy is not only negative. If you can't tell the difference between those two statements, I feel sorry for you.”

It is really worrying that you are unable to recognise the difference between a lean, efficient public sector and a grossly inflated one.

The number of Eskom employees increased from 32,000 in 2003 to 47,600 in 2017.

Does that help you?

 

[CommonSense]

It is really worrying that you are unable to recognise the difference between a lean, efficient public sector and a grossly inflated one.

The number of Eskom employees increased from 32,000 in 2003 to 47,600 in 2017.

Does that help you?

That is not true:

Look back and I stated the following:

"I agree with you that a large public sector without a healthy private sector is not sustainable. There needs to be a balance and the Private sector does indeed need to be much larger than the private public sector."

EDIT reason, the last private should be public naturally. Fixed the original post as well. Otherwise that statement would not have made sense would it?

 

[The_Librarian]

By all means add more public workers to the public worker payroll... it is going to be VERY interesting when the goal of paying everybody's salaries can't be reached and the plundering of private pension funds commence. Once all private pension funds have been depleted, there will be hell to pay...

 

[Milano]

That is not true:

Look back and I stated the following:

"I agree with you that a large public sector without a healthy private sector is not sustainable. There needs to be a balance and the Private sector does indeed need to be much larger than the private public sector."

EDIT reason, the last private should be public naturally. Fixed the original post as well. Otherwise that statement would not have made sense would it?

You did say that earlier but I was replying to your latest post (the one I quoted) where you said:

Again, if there was no corruption (between public and private entities) would we be thinking the public sector per-se is just a drain?

That kind of grossly inflated over-staffing that the SA government is guilty of has nothing to do with the private sector.

 

[CommonSense]

You did say that earlier but I was replying to your latest post (the one I quoted) where you said:


That kind of grossly inflated over-staffing that the SA government is guilty of has nothing to do with the private sector.

I was not being disingenuous in my statements and if you recall the whole "argument" started in post 51 where I replied to a comment by SWA that Public Servants don't pay tax.

It is a factually incorrect statement. Where the money comes from is a whole different argument entirely.
If something like that statement is taken to a court of law and the evidence is presented (a payslip) where PAYE is subtracted from the workers salary, that proves the statement incorrect.

A person working a honest days work and receives payment at the end of the month and looks at his salary slip and sees PAYE deducted along with a myriad of other deductions, will disagree with that statement.

I know of hard working public servants who really contributed the best they could and were in fact very effective and actually tried to (and did) make a difference in the lives of others. The statemements in this thread that those do not contribute to the economy is insincere.

Note: There are other arguments which are not applicable to the statement which was being replied to.
The public service are bloated, there are a lot of people who do not do an honest days work - just like in the private sector too. Yes, the private sector was decimated by government policies and the Covid pandemic.
All those are different arguments.

And the twisting and moving of goal-posts this entire thread is unhelpful and I have grown tired of it now.
No disrespect meant, but the statement about public servants not paying tax is still an incorrect statement to make in my opinion if viewed from the perspective of the public servant.

 

[Swa]

Point 1:
Everyone living in South Africa is part of the economy, whether the formal or the informal.
The formal sector is clear for all, the informal sector not so much.

The informal sector helps the economy in that they are also consumers of products the formal sector delivers, and by doing so they also contribute tot he fiscal income of the state by means of VAT.

Even Taxi drivers contribute to the economy be consuming fuel and other products and also to deliver those who work in the formal sector to their respective areas.

The point with this is that the economy should not be looked at only narrowly by defining tax payers as only a minority who contributes TAX revenue in the very narrow definition which was proposed.

It may come as a surprise but taxi drivers are some of the worst tax dodgers out there. Heck the entire informal sector is a huge tax dodger as it runs mainly on cash with no bookkeeping. And I don't blame them because a lot aren't earning enough to be surpassing the personal income tax threshold. But they are still users of resources and more so than the formal sector that can pay for better services. They are mostly a net drain on resources.

Point 2:
My second point is a counter to the idea that public sector workers (formal economy) is not TAX payers and that their PAYE "is not the same as others".
As I understand the reasoning is that the PAYE which is deducted from public servants at all levels of overnment, should not be counted as part of the TAX base.

My logic tells me that view is absurd (IMHO).

If that view is accepted by economists in general and the general public should then understand that the Salary of government workers is much less than that of the private sector as you need to deduct the PAYE they have to pay back to their employer as they never receive that.

So the salary of all public servants are less by the corresponding tax rate they happen to fall into when PAYE is deducted from thier salaries.

You are trying real hard with the mental gymnastics. Of course they're paid the same or in some cases more. At best you can say the government is getting a discount on their salaries. The part you're missing here is that it's still a net loss so they can't be counted as contributing to the tax base.

Point 3:
The third point I want to make is this: You have direct contributions to the economy, as in the example you espoused on after my previous reply.
That is a direct contribution to the economy in that a phyical material or a service is rendered which others consume and various TAXES are paid on that product/service.

But, you also have to understand that in order for the private secor to be able to deliver those services, you need a public sector which indirectly contributes towards the output of that product/service.

How - what madness? Well, in order for the private sector to deliver said goods and services they need to make use of the roads and infrastructure which, although in most cases is constructed by the private sector on behalf of the government, it needs to be maintained and looked after in the medium/long term by public servants.

I realize that you can counter somewhat by saying public servants don't do all the maintenance themselves and again uses the private sector to do that, but you have to agree that that is not the case at all times.

Public servants do maintain and keep infrastructure operational and are the ones who monitors and informs the private sector where work is required.

So infrastructure can be fully maintained by public servants at times, but other times it is a co-operation between public/private parties and there are cases when it is purely private entities.

The public service also contributes to the economy then by facilitating the private sector and by providing that service they are compensated by direct payments, but also by TAX revenue.

Let me point something out. The private sector is the one paying for this infrastructure. The private sector has no incentive to provide something it can't derive a profit from. You have some valid points, ones I'm not really looking to discuss here. In my mind however there's no difference between the public sector and the government paying the private sector at an inflated cost to provide this. The government can at most be seen as a facilitator.

In both cases the money has to come from somewhere and it's ultimately from tax payers, so in this case the private sector can also not be seen to be contributing to the tax base. Yes you could argue that the private sector is using and paying for a service and then in turn is used to provide this service so it's enabling the economy. But this is superficial. The money still has to come from somewhere and it can only be the private sector. If there is no private sector standing on its own the system falls apart.

At the end of the day we have a growing public sector and a decreasing tax base to support it. It is not the government's job to create work. That is easy to do by having one person dig a hole and another fill it up. It isn't productive. It is only the private sector that can enable the economy to function. It's also only the private sector that are efficient while creating jobs. The state is hugely inefficient.

What a lot of people also seem to be clouding their opinions is the public sector is seen as purely wasteful due to corruption. But what they forget is that corruption has two sides of the equation. The one side is the public purse side, but the other side is the Private side. It is private companies who benefit from the corruption. Registered as such (private) on Cipro order to do business with public entities.
One example: 2010 World cup construction collusion and corruption:

The Many Faces of Corruption in South Africa | Centre for Criminology

www.criminology.uct.ac.za

I don't think anyone disputes this, but at the end of the day you'll find that it's connected cadres who benefited. Yes I know we've had cases like Bosasa but I doubt they really benefited. Cadres are getting companies to do work at inflated costs but these extra expenditure always goes back to cadres' pockets. So it's a case of those willing to do the work at the best value being shifted to those willing to be corrupt. I can't call that benefiting.

 

[Ancalagon]

I was not being disingenuous in my statements and if you recall the whole "argument" started in post 51 where I replied to a comment by SWA that Public Servants don't pay tax.

It is a factually incorrect statement. Where the money comes from is a whole different argument entirely.
If something like that statement is taken to a court of law and the evidence is presented (a payslip) where PAYE is subtracted from the workers salary, that proves the statement incorrect.

A person working a honest days work and receives payment at the end of the month and looks at his salary slip and sees PAYE deducted along with a myriad of other deductions, will disagree with that statement.

I know of hard working public servants who really contributed the best they could and were in fact very effective and actually tried to (and did) make a difference in the lives of others. The statemements in this thread that those do not contribute to the economy is insincere.

Note: There are other arguments which are not applicable to the statement which was being replied to.
The public service are bloated, there are a lot of people who do not do an honest days work - just like in the private sector too. Yes, the private sector was decimated by government policies and the Covid pandemic.
All those are different arguments.

And the twisting and moving of goal-posts this entire thread is unhelpful and I have grown tired of it now.
No disrespect meant, but the statement about public servants not paying tax is still an incorrect statement to make in my opinion if viewed from the perspective of the public servant.

I kinda don't really get your point here. What are you arguing about?

Who pays the public sector salaries? The government.
Who collects the PAYE that public sector employees? The government.

So essentially what happens is that the government pays its employees, who immediately return a portion of their income to the government in the form of PAYE. Later, they return more of it through VAT.