VAT at 16%?

[xumwun]

Petrol IS vat exempt.
Alcohol, cigarettes and air time are not necessary to live.

Only because it's already taxed by the fuel levy.

 

[Sonic2k]

Ah I see.. quite right... checked a petrol slip.
Ja no VAT, they hammer you orders of magnitude harder with all the tax on fuel.

 

[cr@zydude]

Simply abolish personal income tax and raise VAT to 17 - 18% with no tax exempt goods.

This will:

1. Force current non tax-payers (tens of millions of them) to contribute to the running of the country and pay for their own homes, universal health care, state pensions, social grants and infrastructure development (indirectly). Every person will exercise their social responsibility by paying tax.

The rich will simply pay more tax by them spending more, and the poor will pay less tax by spending less (its all relative). Everyone pays equitably.

2. Cut the number staff at SARS down dramatically by eliminating annual tax returns and all the admin involved. Remaining staff will simply focus on business VAT compliance.

This solution will relieve a lot of stress for public and SARS accordingly.

You want the Russian system. Everyone there pays 18 percent regardless of income.

What is silly is that you claim this will make poor people contribute, ignoring the vat that they already pay.

 

[The_Assimilator]

What is silly is that you claim this will make poor people contribute, ignoring the vat that they already pay.

No, the point is it will increase the proportion of tax that lower-income groups pay, which will in turn relieve pressure on the much smaller middle- and upper-income groups that currently carry most of the tax burden. In other words, make things more equitable.

However, I don't see increasing VAT as particularly viable - while it makes sense from a fairness perspective, the fact is those who would be most affected by this are people with lower incomes, who are already struggling. So more of those people end up in debt, or without a home, or without work, and then end up relying on welfare payments... which is self-defeating.

Personally I think the answer is to massively up income tax on wealthy individuals, as well as ensure said individuals are not using loopholes or stashing their capital overseas to avoid being taxed. However I would only support such a move if it was implemented by a fiscally responsible government, which ours most assuredly is not.

 

[MKFrost]

Personally I think the answer is to massively up income tax on wealthy individuals, as well as ensure said individuals are not using loopholes or stashing their capital overseas to avoid being taxed. However I would only support such a move if it was implemented by a fiscally responsible government, which ours most assuredly is not.

I think you are living in a dream world. If you take VAT, rates and taxes and all the other taxes like on fuel etc.. then I already pay close on 60% tax each year. How much more must I pay before you will be happy. You cannot expect the 1% [of which I'm not part] to carry the whole country, it will just not work. They will just take their things and go somewhere else.

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else.

When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, and that.....my dear friend, is about the end of any nation."

and another favorite....

"You cannot multiply wealth by dividing it."

 

[BandwidthAddict]

I think you are living in a dream world. If you take VAT, rates and taxes and all the other taxes like on fuel etc.. then I already pay close on 60% tax each year. How much more must I pay before you will be happy. You cannot expect the 1% [of which I'm not part] to carry the whole country, it will just not work. They will just take their things and go somewhere else.

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else.

When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, and that.....my dear friend, is about the end of any nation."

and another favorite....

"You cannot multiply wealth by dividing it."

+1

 

[cr@zydude]

No, the point is it will increase the proportion of tax that lower-income groups pay, which will in turn relieve pressure on the much smaller middle- and upper-income groups that currently carry most of the tax burden. In other words, make things more equitable.

However, I don't see increasing VAT as particularly viable - while it makes sense from a fairness perspective, the fact is those who would be most affected by this are people with lower incomes, who are already struggling. So more of those people end up in debt, or without a home, or without work, and then end up relying on welfare payments... which is self-defeating.

Personally I think the answer is to massively up income tax on wealthy individuals, as well as ensure said individuals are not using loopholes or stashing their capital overseas to avoid being taxed. However I would only support such a move if it was implemented by a fiscally responsible government, which ours most assuredly is not.

I don't think that there is pressure on upper income groups. We don't have a super tax. People earning tens of millions per year pay only 40%. Trust me, people with low incomes paying only vat feel it a lot more than the super rich, however many taxes you make them pay.

While it is true that the wealthiest are the most likely to leave if they feel over taxed, our rates are not yet very high.

 

[BandwidthAddict]

Unfortunately we are dealing with people who have failed at basic understanding of economics and thus subscribe to the fallacy of the 1% being capable of supporting the 99%. It is just not mathematically feasible. The only people who suffer from policies intended to punish the 1% are the 99%.

 

[Sinbad]

I don't think that there is pressure on upper income groups. We don't have a super tax. People earning tens of millions per year pay only 40%. Trust me, people with low incomes paying only vat feel it a lot more than the super rich, however many taxes you make them pay.

While it is true that the wealthiest are the most likely to leave if they feel over taxed, our rates are not yet very high.

Our rates may not be very high in your opinion (I think they are, given the low numbers at which each tier becomes effective), but the value for money we get for them is certainly non-existant.

 

[TelkomUseless]

Unfortunately we are dealing with people who have failed at basic understanding of economics and thus subscribe to the fallacy of the 1% being capable of supporting the 99%. It is just not mathematically feasible. The only people who suffer from policies intended to punish the 1% are the 99%.

this is our government, can't even understand basic economics.

 

[cr@zydude]

Unfortunately we are dealing with people who have failed at basic understanding of economics and thus subscribe to the fallacy of the 1% being capable of supporting the 99%. It is just not mathematically feasible. The only people who suffer from policies intended to punish the 1% are the 99%.

I'm not saying that only the richest people should pay taxes. I am saying that if taxes are to be increased, it should be at the top end.

 

[Sinbad]

I'm not saying that only the richest people should pay taxes. I am saying that if taxes are to be increased, it should be at the top end.

And at the top end you can't do that via income tax, since the majority of income will come from dividends, not a normal salary.
Consumption tax is the way to do it IMHO.

 

[MKFrost]

I don't think that there is pressure on upper income groups. We don't have a super tax. People earning tens of millions per year pay only 40%. Trust me, people with low incomes paying only vat feel it a lot more than the super rich, however many taxes you make them pay.

While it is true that the wealthiest are the most likely to leave if they feel over taxed, our rates are not yet very high.

I agree in that our rates are not that high and think that we can go up to 50% BUT, this should be for those who earn above say R5m or more. A R1m a year sounds like a lot but take off around 55 to 60% in all the taxes and that person is left with R33,000 a month.

Now tax that same person at around 50% plus all the other taxes and you start getting to 65/70% in total leaving that person with around R25/28,000 a month. Yes still plenty for some but now start doing all the sums i.e. mortgage, car payments etc..and the 'super rich' quickly becomes the lower middle class.

They can lift VAT to 20%and that will still not solve the problem. There will be some additional funds for a year or two before that is also used up with an ever increasing government, social spending etc...

The only thing that will help in this country is JOBS and less government spending. Those two alone will turn this country around like nothing else. Problem is that our job market is just to restrictive.

 

[saturnz]

I will say this again.

Government nowhere in any of their finance documents have referred to increases in VAT at least for the foreseable medium term.

Over the past few years tax relief to individuals has amounted to well over R100bn, the PWC confirmed this number yesterday in public hearings on this year's budget. Company taxes was also reduced from 40% to 28%.

If you look at the tax/gdp ratio it has more or less remained constant which suggests that the tax burden hasn't really increased.

So I'm not sure where this perception comes from that it is intention of government to increase taxes.

 

[Sinbad]

I will say this again.

Government nowhere in any of their finance documents have referred to increases in VAT at least for the foreseable medium term.

Over the past few years tax relief to individuals has amounted to well over R100bn, the PWC confirmed this number yesterday in public hearings on this year's budget. Company taxes was also reduced from 40% to 28%.

If you look at the tax/gdp ratio it has more or less remained constant which suggests that the tax burden hasn't really increased.

So I'm not sure where this perception comes from that it is intention of government to increase taxes.

I think there is an expectation that taxes will have to increase, given the constantly increasing size of the public service, the constantly increasing amount of social grant payments, and the absolutely zero-growth-fostering policy of the government. That money all has to come from somewhere.

 

[AlphaBravo]

I think there is an expectation that taxes will have to increase, given the constantly increasing size of the public service, the constantly increasing amount of social grant payments, and the absolutely zero-growth-fostering policy of the government. That money all has to come from somewhere.

Quite right, Etoll, eskom tariff increase. Municipal rates increase as they have to now look at housing for the poor. Fuel levy increase etc. Personal income tax is not the only way to get money for the government. The challenge is to increase the base that pays tax.

 

[saturnz]

I think there is an expectation that taxes will have to increase, given the constantly increasing size of the public service, the constantly increasing amount of social grant payments, and the absolutely zero-growth-fostering policy of the government. That money all has to come from somewhere.

The MTEF period covers the next three years and nowhere is there an indication of an increase in taxes, tax revenue grows in ratio to the rest of the numbers.

I'm not sure where this expectation comes from, atleast the numbers don't create that expectation.

Also if expenditure ceilings as introduced in the budget, the budget office and the chief procurement office start to show their teeth there may indeed be a cap on the size of public spend, especially if the NDP is adopted as it should with it speaking to the professionalisation of the state.