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So how much was collected in taxes over the last coupe of years?
Ever wondered how much money the South African government collected in VAT, Personal income tax, corporate income tax or via the fuel levy? Or customs duties levied in imported goods? We take a look at the numbers below for the last couple of years. And it looks like there is a ever greater dependence on personal income tax, which is a massive problem when people start losing their jobs, and companies start retrenching staff.
As this ever greater dependence of the government on personal income taxes continues to grow it basically implies the burden on those still employed and that are being taxed, will become ever greater as government attempts to keep collecting the same amount of taxes (or more) from a shrinking tax base. Sadly for the South African government is this cow they that are milking is start to run out of milk fast. Consumers are struggling, their personal income taxes keeps being increased, VAT has been increased, fuel levy increased, sin taxes increased. Consumers just dont have the money anymore. And less employed means less personal income taxes collected by the state as well as less VAT collected (as those who were employed but are not employed anymore cannot keep buying goods that government collects VAT money on). The table below breaks down the Rand value in millions of the following tax types as well as the various tax types overall contribution to total taxes collected by SARS on behalf of the South African government.
As this ever greater dependence of the government on personal income taxes continues to grow it basically implies the burden on those still employed and that are being taxed, will become ever greater as government attempts to keep collecting the same amount of taxes (or more) from a shrinking tax base. Sadly for the South African government is this cow they that are milking is start to run out of milk fast. Consumers are struggling, their personal income taxes keeps being increased, VAT has been increased, fuel levy increased, sin taxes increased. Consumers just dont have the money anymore. And less employed means less personal income taxes collected by the state as well as less VAT collected (as those who were employed but are not employed anymore cannot keep buying goods that government collects VAT money on). The table below breaks down the Rand value in millions of the following tax types as well as the various tax types overall contribution to total taxes collected by SARS on behalf of the South African government.
So the main tax contributors to South Africa's government tax revenues for 2017/2018 tax year are as follows:
Worrying for us is the fact that the customs duties makes up such a small part of South Africa's total taxes. South Africa imports a lot of goods, and a lot of these imported goods are hurting local industries and businesses, which affects employment numbers and in turn affects PIT and VAT collected by the state. We would recommend to the new finance minster, Tito Mboweni (caricature below), that South Africa should look to widen the net off goods duties are levied on, not only to broaden the tax net on imported goods, but to increase the contribution of customs duties and to provide a bit more protection to South African industry, especially the manufacturing industry.
- Personal Income Tax (PIT): 38.1%
- VAT: 24.5%
- Corporate Income Tax (CIT): 18.1%
- Other taxes:7.2%
- Fuel levy: 5.8%
- Customs duties: 4%
- Dividend Tax:2.3%
Worrying for us is the fact that the customs duties makes up such a small part of South Africa's total taxes. South Africa imports a lot of goods, and a lot of these imported goods are hurting local industries and businesses, which affects employment numbers and in turn affects PIT and VAT collected by the state. We would recommend to the new finance minster, Tito Mboweni (caricature below), that South Africa should look to widen the net off goods duties are levied on, not only to broaden the tax net on imported goods, but to increase the contribution of customs duties and to provide a bit more protection to South African industry, especially the manufacturing industry.
Finance Minster Tito Mboweni caricature
While the Mid term budget will be a tough one for the newly appointed finance minster, National Treasury and government should remember the following. Government collects enough taxes to fund its spending programs. They as government just needs to ensure that the taxes collected are spent effective and efficiently. If its not done, increasing taxes will just lead to increased ineffective spending and corruption and looting. Good luck with the MTBS, minister Mboweni, you and National Treasury is gonna need it.