Taxes: increase of the indirect taxes | Tax-Evasion.org

Posted on May 25, 2012 by admin

In the recent budget speech Finance Minister Pravin Gordhan announced that the Finances were in a good health. But unfortunately this appearance is wrong.

For the past 10 years middle- and high-income groups in South Africa have paid more than 40 % of their gross income in taxes and so-called invisible taxes. Finance Minister Pravin Gordhan announced in his recent budget speech that the indirect taxes would even increase.

For example the fuel levy is rising by 20c/litre and Road Accident Fund levy by 8c/litre. This means that petrol is expected to go up by at least 28c/litre. also the electricity levy has risen 250%, part of which companies can pass on to the consumer.

Although the consumer has to pay high taxes, he also has to carry all costs of education, security and medical expenses. The government should provide these services, but the consumer has to pay for it in addition to the taxes. And the consumer doesn?t get any service in return. Now consumers are expected to pay for roads as well.

An other problem is that only about 6 million out of a population of 50 million pay personal income tax, whereas 16 million people receive welfare.?In 2012/13 personal income tax will comprise 35% of government?s total income. By 2014 the income tax is expected to be government?s major source of income. However there is a move to tax companies higher through capital gain tax and higher dividend tax then expected.

The announced income tax relief of R9,5bn is mostly directed at the lower-income groups. The middle- and high-income groups are being increasingly expected to contribute to the fiscus.

The saving announced by Pravin Gordhan has to be seen critical: The lower income category will have a saving of up to 72,5%, whereas some high-income earners will only save 2,1 %. Tough there is a relief regarding the income tax, but the indirect taxes will increase at the same time.

Tags: fund levy, gross income, indirect taxes, medical expenses
Category Tax Evasion
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