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Many people tend to simply ignore articles in business magazines or on blogs like mine about the growth rate of countries. One of the reasons they do so is that they don’t tie up their personal tax rates and growth rates together – if they did they would be a lot more interested. In other words, the fact that South Africa's growth forecast rate was meant to be 1,7%, as per the government's budget in February this year, and is instead going to be about 0,5%, according to the World Bank, means that the government will collect much less taxes this year than they plan to collect. They will collect fewer taxes because the economy and businesses are not growing as well as they would have hoped.
What does that mean? That means they will have to try, as they have been doing almost every year now, to come up with some more taxes. New ways to tax the so-called rich – I say so-called, because in South Africa what we define as "rich" would not even be the top tax rates in other countries – and while we already have a 45% top tax rate, in countries like the United States they are talking about lowering their 39% top rate to 35%. So, we are going to try and look at everything we can do, other than tackle something like VAT which the Government seems nervous to do, and try and work out more ways to target the wealthy. Raising VAT would make the most sense of course. The more you do that, the more you encourage those individuals to look elsewhere and they are after all the job creators in the country. This is really becoming a vicious circle and until the government starts listening to people who understand what it takes to grow the economy, the circle will unfortunately get worse and worse with increased taxes, low productivity and more and more successful business people being chased away from South Africa. I really hope it does not take more than a few more years to pick up the pattern and do something. Another concern would be, and that is maybe a topic for another blog article, how many people, and I have even seen it with attorneys involved in this field of work, who are just simply dishonest in their tax affairs and the more the government increases the taxes, the more some people simply just ignore taxation. That too is not a winning recipe for a country.
Posted by Michael de Broglio on Wednesday 06-Dec-17
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Comments
Michelle said:
on Friday 12-Jan-18 07:27 AM
I think raising the VAT is definitely not the option. I believe the problem matter we have is the government who do not really know how to manage these problems and to come up with a process that will actually work.
Thabitha said:
on Monday 08-Jan-18 08:43 AM
I hope they will stop chasing away business people and start creating jobs and grow the economy, we also need to learn from other countries mistakes and success in order for us not to do the same mistakes or in order for us to be successful.
Nicky said:
on Friday 15-Dec-17 11:51 AM
I don't think that raising VAT is a viable option, as this would impact the poorest who desperately need the resources that's supposed to be generated from tax. Maybe if tax money was used properly and not "stolen" for personal gain SA's growth rate would be better.
Ashleigh said:
on Friday 15-Dec-17 09:17 AM
Each year seems to be harder then the previous year. This makes me stress for how its looking for our children one day. That's why I am hard on my kids with their education. I want them to achieve something and hopefully make a difference. The rate things are going, households are overflowing to just keep heads above water. I never want my kids to feel dependant on someone else and I want to have peace of mind that they are successful and independent.
Jadine E said:
on Thursday 14-Dec-17 07:04 AM
Even so when you fall under the so called rich, it affects even the middle class because everytime you get a raise your tax also increases, making you cut back more on the necessities.
Jadine Richards said:
on Tuesday 12-Dec-17 08:11 AM
I agree that the more the Government punishes the so called wealthy, the more they develop an attitude of why should I play by the rules? In South Africa, does it really pay to be honest and play by the rules when even our President sets an example of "you can do whatever you want to do and you can escape accountability"? South Africa is currently a Powder Keg just waiting to explode in all areas (financial, judicial, social) and unless South Africa starts seeing all these critical elements in the correct way and making a commitment to fix them quickly, we are heading for disaster. Tax reforms will not be necessary in a country that cannot even afford to eat!!!!
Henrietta said:
on Monday 11-Dec-17 02:15 PM
It is a sad hard fact that qualified experience people are leaving the country because of this. It seems that there is almost no future for us here if this keeps up and this is worrying especially with kids involve, what future do they have. I will move with a blink of an eye if the opportunity comes no doubt. I will miss family and friends but it's not enough to keep me here. I also hope that South Africa do something about it and that it does not take years.
Angelique P said:
on Monday 11-Dec-17 10:13 AM
Everything is getting so expensive. I think the “rich people” pay enough tax. All of us are struggling to pay the big amounts of money. When I listen to people that have big companies they always moan about the huge amount of tax they need to pay. If it keeps on going like this we are going to lose all the big companies and then we are going to be in trouble.
Melissa said:
on Thursday 07-Dec-17 10:36 AM
Things are just getting ridiculously expensive nowadays, which means we wont be able to keep up. The future doesn't look good for us or our children.
Tamaryn said:
on Wednesday 06-Dec-17 05:00 PM
People have been advised for some time now to cut back on the non-essentials and many have done so. It will only be a matter of time before people start to cut back on essentials because they simply cannot afford the cost of living. This will have a detrimental effect going forward. On the macro scale, if people cut back on nutritional food, education, health care etc.- the cost will add to the government's existing spending on these service and more taxes will have to be raised.
Angelique Jurgens said:
on Wednesday 06-Dec-17 04:14 PM
How many citizens can survive with our high cosst of living and minimum wage? If the daily cost of living increases in the form of higher VAT - well there are many implications. For one, poverty increases and more people turn to crime. It is no excuse but it is the unfortunate fact. The government need to consult with people and take their advises about the economy or at least consider it. Corruption - when this comes to an end, maybe, just maybe our economy will go somewhere. Alas, "As long as greed is stronger than compassion, there will always be suffering".
Daniella said:
on Wednesday 06-Dec-17 02:20 PM
The difference between 1.7% and 0,5% is huge, its not like a mere 1%. It really is quite scary, also with such a high unemployment rate its going to be almost impossible to increase our GDP.
Mathilda said:
on Wednesday 06-Dec-17 10:27 AM
This is very worrying and I don’t think majority of the people know what a huge impact this will have on all of us if the Country continues to grow at a rate like this
I know of 5 people that have moved overseas in this year alone
And it making one think what is the future going to look like not only for us but for our children
Natasha said:
on Wednesday 06-Dec-17 09:28 AM
We already pay so much Vat and now its going to mean that we are even going to pay more then it is, everything is going sky high wonder how its going to be in the next few years. Daily living is going to be more expensive and there is already a lot of people that struggle as it is. I don't know what are we going to do regarding this. Some people's earnings will never be able to keep up.
Alexis said:
on Wednesday 06-Dec-17 08:55 AM
And the little people whom are struggling as it is are to struggle even more. It is quite astonishing. However the people whom avoid tax are not doing us any favors either, but what can we do...all I can think of is Robin Hood (Disney). A lot of people are leaving and rightfully so, to possibly a safer and fair country and to not be subjected to this discrimination in a sense
Bianca R said:
on Wednesday 06-Dec-17 08:26 AM
This would just be increasing the cost of living, as it is, the majority of the population can barely survive and afford the bare necessities. It really is incredibly sad for those who are minimum earners, they can't make ends meet and the bar is just being lifted higher and higher. One really needs to understand that our country's growth or lack thereof, is a very serious issue, at the end of the day, the economy is not growing and that is extremely concerning to investors etc. Costs are increasing as a result and growth is lowering!
Jessica Apfel said:
on Wednesday 06-Dec-17 08:11 AM
Increasing the amount charged for VAT will increase the general cost of living within South Africa, and as it stands the general population do not earn enough to keep up with the increases! The cost of living far exceeds the minimum wage. The wealth tax should be maintained but the tax should be used correctly. No point in taxing the population when we require a 10 Billion Rand bail out for SAA and the like!
In saying that however, the average tax payer is only really concerned when it directly affects them. I do feel that the recent fuel hike of 71c will certainly affect us all.
I do hope that with the ANC conference looming and change on the cards that it has a positive impact on our economy.
david said:
on Wednesday 06-Dec-17 07:08 AM
and in the last few months 3 people i know have either left SA, or are just about to do so. all 3 are qualified people, with one owning his own business and employing 5 people.
Johannesburg based attorney specializing in personal injury matters including Road Accident Fund claims and medical negligence matters. My interests include golf, reading and the internet and the way it is constantly developing. I have a passion for life and a desire for less stress!
