I wonder where informal sector workers, such as those who have marketed the party’s purplecow.mobi website, fit into the radical tax change proposed by the new Capitalist Party of South Africa, the ZACP?
Would John, and some of the millions of informal, below-the-radar workers, be able to score from such a tax? As the video explains, up to a certain level of income, the government pays you a percentage — the tax rate — of the difference between your earnings and that income level. Above the income level, you pay income tax at the same rate.
If an employer received a dispensation to employ someone for less than the legislated minimum wage, say R2,000, she would get in total R4,250, a welcome boost — except that it is not certain informal sector workers would be able to benefit from a scheme that relies on formality. Another problem would be the sheer cost. Just taking the latest number of unemployed and discouraged work seekers, nine million, who by definition have no income, I calculate the cost of the Negative Income Tax to be around R360-billion, almost double the present amount spent on all grants of around R163-billion.
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