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http://www.fin24.com/articles/default/display_article.aspx?Channel=News_Home&ArticleId=1518-25_2548207
Johannesburg - The tax burden on South Africa's few million taxpayers will ramp up by about another 9% to fund government's grandiose plans for social grants.
There are only 5.3m taxpayers in the country and 1.2m of these pay 75% of all personal and company tax collected.
"These people will be expected to fork out an extra R210bn to finance the government's proposed social security fund (National Security Savings Fund), national healthcare (National Health Insurance) and a basic income for the unemployed.
"This will increase government expenditure from about 31% to more than 40% of the gross domestic product, and the tax burden of only a few million people from 27% to 37%," observes Economists.co.za Economist Mike Schüssler.
"This is unsustainable for a country with the smallest number of taxpayers and the highest rate of taxation," he argues.
During last week he participated in a panel discussion on the affordability of the National Security Savings Fund designed by Old Mutual Actuaries & Consultants (Omac).
According to Schüssler's calculations, the National Security Savings Fund will draw an additional R80bn a year from the fiscus, the National Health Insurance R80bn, and the basic income grant R50bn.
As matters stand, South Africa is already the country with the highest proportion of people depending on social grants.
Currently 13m or 26% of the population depend on these grants. In other words, each taxpayer is responsible for two people's social grants.
The government's plans for an income grant to the unemployed will add another seven million to the list of dependants.
A spike in taxation and contributions to retirement and medical funds is unavoidable if the plans for a social security fund and the national health plan are to be realised.
Schüssler says that in 2006 R84bn was paid out in old-age pensions to 2.4m recipients. This figure could double within the social security fund.
Selwyn Jehoma, another panel member and head of overall social welfare at the Department of Social Development, disagrees on what the social security fund will cost.
He says the social security fund will not involve the fiscus in additional expenditure because more people will be contributing. He estimates that seven to nine million working in the formal sector will contribute.
"Initially it will cost money to set up the infrastructure, but within the first five to ten years enough money will have been accumulated in the fund to finance the payouts."
One of the biggest challenges the National Security Savings Fund will face is how to prevent the rich taking advantage of the poor's savings. The death rate among the poor is high, and this will mean that they do not need retirement funding. Depending on how the fund is constituted, contributions by the poor will benefit the rich.
Jehoma reckons that about seven million will qualify for an income grant.
Schüssler says the national health system will cost up to R200bn. Currently the government is spending R52bn on healthcare and R74bn is being contributed to medical schemes.
This, he says, could cost R3 000 to R4 000 a month. For people in the lower income groups who are currently paying no tax at all this would absorb half of their salaries.
Johannesburg - The tax burden on South Africa's few million taxpayers will ramp up by about another 9% to fund government's grandiose plans for social grants.
There are only 5.3m taxpayers in the country and 1.2m of these pay 75% of all personal and company tax collected.
"These people will be expected to fork out an extra R210bn to finance the government's proposed social security fund (National Security Savings Fund), national healthcare (National Health Insurance) and a basic income for the unemployed.
"This will increase government expenditure from about 31% to more than 40% of the gross domestic product, and the tax burden of only a few million people from 27% to 37%," observes Economists.co.za Economist Mike Schüssler.
"This is unsustainable for a country with the smallest number of taxpayers and the highest rate of taxation," he argues.
During last week he participated in a panel discussion on the affordability of the National Security Savings Fund designed by Old Mutual Actuaries & Consultants (Omac).
According to Schüssler's calculations, the National Security Savings Fund will draw an additional R80bn a year from the fiscus, the National Health Insurance R80bn, and the basic income grant R50bn.
As matters stand, South Africa is already the country with the highest proportion of people depending on social grants.
Currently 13m or 26% of the population depend on these grants. In other words, each taxpayer is responsible for two people's social grants.
The government's plans for an income grant to the unemployed will add another seven million to the list of dependants.
A spike in taxation and contributions to retirement and medical funds is unavoidable if the plans for a social security fund and the national health plan are to be realised.
Schüssler says that in 2006 R84bn was paid out in old-age pensions to 2.4m recipients. This figure could double within the social security fund.
Selwyn Jehoma, another panel member and head of overall social welfare at the Department of Social Development, disagrees on what the social security fund will cost.
He says the social security fund will not involve the fiscus in additional expenditure because more people will be contributing. He estimates that seven to nine million working in the formal sector will contribute.
"Initially it will cost money to set up the infrastructure, but within the first five to ten years enough money will have been accumulated in the fund to finance the payouts."
One of the biggest challenges the National Security Savings Fund will face is how to prevent the rich taking advantage of the poor's savings. The death rate among the poor is high, and this will mean that they do not need retirement funding. Depending on how the fund is constituted, contributions by the poor will benefit the rich.
Jehoma reckons that about seven million will qualify for an income grant.
Schüssler says the national health system will cost up to R200bn. Currently the government is spending R52bn on healthcare and R74bn is being contributed to medical schemes.
This, he says, could cost R3 000 to R4 000 a month. For people in the lower income groups who are currently paying no tax at all this would absorb half of their salaries.
