Several years back I wrote an article titled “Lekker by die See, maar duur by die See”, which translated means “Nice by the Sea, but expensive by the Sea”. The gist of the article was the prospect of future higher taxation, which sadly seems to have come to fruition.
Personal income taxes now make-up 38.1% of the total tax revenue collected and then we have the indirect taxes like vat, fuel levy, road accident levy, sin tax, sugar tax, custom duty, transfer duty, estate duty and the list goes on……….. Not to even broach the subject of what we get for our taxes or should I rather say don’t get!
Treasury will collect R12.1 billion additional tax this year by not adjusting the income tax bands for inflation, which is known as bracket-creep and affects everyone who pays tax from the lowest band to the new super tax band of 45%, which will bring in another R4.4 billion. The increase in dividend tax will provide R6.8 billion extra with sin tax / fuel levy adding another R5.1 billion totalling R 28.4 in additional taxes and this is still not enough, but reduces the budget deficit to 3.4% of GDP.
I wonder if the Minister of Finance has ever read the story of “The Goose That Laid the Golden Eggs”. I am quite sure he has, which worries me. The 2017 Budget smells of desperate and who can blame Treasury with more bureaucrats on the pay-roll than the US government, 17 million social grant recipients and the fastest growing line item in the budget being interest on government debt, which now exceeds 50% of GDP. And worst of the all the bucket is still leaking, with broad based maladministration, corruption and wasteful expenditure continuing unabated.
If you are feeling more like a Foie Gras goose than a Golden Goose spare a thought for our Minister of Finance who is still in the firing line notwithstanding his determined stand to do the right thing in the face of relentless opposition.
Mcomm, CFP®, HdipTax
T. 021-851 3746