BUSINESS MAVERICK ANALYSIS: Born free, taxed to death

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BUSINESS MAVERICK ANALYSIS: Born free, taxed to death By Reg Rumney

’s Scorpio unit. Also making tax more controversial than usual has been the suggestion of a tax revolt by outgoing Western Cape premier Helen Zille and the corruption sagas involving allegations of tax fraud involving illegal cigarettes, not to mention citizen resentment of syphoning off of billions in citizens’ money in State Capture criminality.shows, for a number of countries, rich and poor, tax as a percentage of Gross Domestic Product, a measure of total economic output.

Part of the problem is our anaemic economic growth rate. Raising GDP would mean the country would automatically be ranked lower in these sorts of tables. Job-poor economic growth would not make a big enough actual difference, however. Unemployment arguably remains South Africa’s biggest economic problem and moving more economically active people into the formal economy could broaden the tax base and the economy.

The real problem is that that small number of wealthier but not really rich people who pay most income tax do not benefit as much as they would like. The truly wealthy have an army of tax consultants and, as the Panama Papers show, offshore tax havens to protect their wealth. In addition, the user-pays principle has, since days of apartheid, been used to move national road-building off the government’s balance sheet and this has not reversed under democracy. No wonder the tolling of previously untolled roads in the Gauteng Freeway Improvement Project sparked resistance and created the Organisation Undoing Tax Abuse to oppose paying e-tolls.

 

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