Editorial: Wealth of the nation
RUMOURS that the Minister of Finance might announce a little increase in income tax in the Budget this week have put the high earning classes into a bit of a panic.
So used have taxpayers become to the annual cuts announced by successive ministers that the possibility that this year might be different and that the top marginal rate might even be raised has been met with surprise and even indignation in some quarters.
But there is plenty of room to raise taxes.
The ratio of tax to gross domestic product has dropped over the years, from 27.6 percent in 2007/08 to 24.6 percent in 2011/12.
And, as research by Cape Town’s Alternative Information and Development Centre shows, the National Treasury has been more than generous with income tax payers over the last few years. Under the guise of adjusting for “bracket creep” – the effect of inflation on salaries and wages – the Treasury has, in fact, been adjusting tax brackets far faster than the inflation rate, handing back hundreds of billions of rands to taxpayers.
Nor is it true, as some would have us believe, that a small handful of long-suffering taxpayers is holding together the whole country’s finances. In fact, as the 2010/11 tax statistics show, while R250 billion was raised in income tax in that year, R191bn was collected in VAT receipts and R34bn from customs and excise duties.
In a real sense we are all taxpayers, even those of us – 39 percent of South Africans according to the National Planning Commission – who live on less than R432 a month.
So let’s not worry about how damaging an increase in income tax would be to South Africa’s economy, our reputation abroad or our ability to attract and retain the wealthy with all their skills and talents.
Let’s rather worry about how a poor country like ours is going to find the money to finance the sort of development that we need.
And if, like actor Gerard Depardieu did in France, some people do quit the country to get away from higher taxes, well, we’ll just have to manage without them.