Tax picture not too rosy in SA

While, on the surface, it seems as though the SA Revenue Service (Sars) is doing its job because tax collections are up 7.8% on the previous year – meaning an extra R133 billion for the government – deeper analysis shows the country could be heading towards a tax crisis.

The worry, according to expert economists we spoke to, is that South Africa’s tax base is in danger of collapsing.

Although there are about 24 million registered taxpayers – those in employment – just over seven million will submit tax returns and pay personal income tax.

The rest fall under the R95 000 annual income threshold. So, the bulk of personal income tax collection – which accounts for almost 36% of total tax revenue – comes from less than 10% of our total population.

Effectively, that means that 10% of our people are picking up most of the costs for the rest of society.

ALSO READ: National Treasury withdraws proposed tax amendment amid ConCourt proceedings

It is evident that this skewed collection model – both in terms of the burden borne by individuals and by the comparatively small number of them – might not be sustainable.

When you factor in that many of the higher-paid individuals are emigrating – and the high tax rates here are cited, along with crime, as some of the reasons people are being forced to leave – then experts are correct in their concern about a potential tax base collapse.

To be fair, though, the jobs of those emigrating may be filled by replacements, so tax will still be collected, although perhaps not on the same scale.

What is worrying, however, is that it is no longer just whites who are leaving – skilled black people are also uprooting themselves and their families.

And, whichever way you slice it, that is bad for the country. The more skills and experience we lose, the worse it is for everyone left behind.

ALSO READ: Sars recovers R6.7 billion from syndicated tax investigations