By Prof Matthew Lester (Tax Talk)
Executive summary (SAIT Technical)
Prof Matthew Lester reflects on the tax statistics recently presented to parliament. There are more than 13 million taxpayers registered for personal income tax whereas only 4.8 million are actually liable to tax. The top 10% of earners pay 57% of the country's personal income tax. The top 2% of registered VAT vendors collect 61% of the VAT.
ON October 22 Dr Randall Carolissen presented the SA Revenue Service and National Treasury Tax Statistics 2012 in parliament. Very impressive stuff, with more detail than ever.
The graphics in the report are stunning and express the true challenge facing National Treasury and SARS in these difficult times. They paint a picture of how every last rand will have to be chased down if SARS is to achieve its goal and contain the national deficit.
There are now more than 13-million taxpayers on personal income tax, but only 4.8-million are actually liable to tax, fewer than one in 10 South Africans. And, more frightening, the top 10% of earners (fewer than 500000, or one in 100), pay 57% of South Africa’s personal income tax.
There are just over two million corporate taxpayers, but only 792000 are actually liable to tax. The top 0.1% generate taxable income of greater than R100-million a year and they pay 57% of South Africa’s corporate taxes.
The number of registered vendors liable to submit VAT returns is about 400000, down on previous years as more stringent regulation of the VAT system has got rid of many unwanted vendors. The top 2% of registered vendors collect 61% of the VAT.
"Told you so,” say some fatcats, "we’re keeping South Africa going. Never in the field of taxation has so much been owed by so many to so few.”
I disagree. Without the smaller taxpayers and the transaction taxes paid by all South Africans, SARS would not come close to budget, the national deficit would be out of hand and the economy would be downgraded by the rating agencies. Economic chaos would send us all to oblivion.
It’s crazy to think that every citizen, even those 15 million on social welfare, makes a contribution that has allowed tax collections to increase in the most distressing of economic times.
Many say that Nelson Mandela must be shocked by today’s new South Africa. Maybe. Thabo Mbeki certainly is. But that cannot extend to tax collections.
We should run a competition for students to develop graphic images from the SARS stats base that demonstrate the extremes of the South African economy. Perhaps that would lead to a better understanding.
·Lester is a professor at the Rhodes Business School, Grahamstown. For more, see www.criticalthought.co.za