Grocott's Mail
  • NEWS
    • Courts & Crime
    • Features
    • Politics
    • People
    • Health & Well-being
  • SPORT
    • News
    • Results
    • Sports Diary
    • Club Contacts
    • Columns
    • Sport Galleries
    • Sport Videos
  • OPINION
    • Election Connection
    • Makana Voices
    • Deur ‘n Gekleurde Bril
    • Newtown… Old Eyes
    • Incisive View
    • Your Say
  • ARTSLIFE
    • Cue
    • Makana Sharp!
    • Visual Art
    • Literature
    • Food & Fun
    • Festivals
    • Community Arts
    • Going Places
  • OUR TOWN
    • What’s on
    • Spiritual
    • Emergency & Well-being
    • Safety
    • Civic
    • Municipality
    • Weather
    • Properties
      • Grahamstown Properties
    • Your Town, Our Town
  • OUTSIDE
    • Enviro News
    • Gardening
    • Farming
    • Science
    • Conservation
    • Motoring
    • Pets/Animals
  • ECONOMIX
    • Business News
    • Entrepreneurship
    • Personal Finance
  • EDUCATION
    • Education NEWS
    • Education OUR TOWN
    • Education INFO
  • Covid-19
  • EDITORIAL
Facebook Twitter Instagram
Trending
  • In the words of Nelson Mandela, “To deny people their human rights is to challenge their very humanity”
  • Flooding at the James Kleynhans Water Treatment Works
  • Avbob 2023 Poetry Competition Second Place: Jeannie Wallace McKeown
  • Avbob 2023 Poetry Competition Winner: Sithembele Isaac Xhegwana
  • Residents of Extensions Nine, 10, Transit Camp, Phumlani and Enkanini voice discontent!
  • Makhanda Creatives Speak Out
  • Running towards a drug and alcohol-free Makhanda
  • What’s On 23 – 30 March
Facebook Twitter Instagram
Grocott's Mail
  • NEWS
    • Courts & Crime
    • Features
    • Politics
    • People
    • Health & Well-being
  • SPORT
    • News
    • Results
    • Sports Diary
    • Club Contacts
    • Columns
    • Sport Galleries
    • Sport Videos
  • OPINION
    • Election Connection
    • Makana Voices
    • Deur ‘n Gekleurde Bril
    • Newtown… Old Eyes
    • Incisive View
    • Your Say
  • ARTSLIFE
    • Cue
    • Makana Sharp!
    • Visual Art
    • Literature
    • Food & Fun
    • Festivals
    • Community Arts
    • Going Places
  • OUR TOWN
    • What’s on
    • Spiritual
    • Emergency & Well-being
    • Safety
    • Civic
    • Municipality
    • Weather
    • Properties
      • Grahamstown Properties
    • Your Town, Our Town
  • OUTSIDE
    • Enviro News
    • Gardening
    • Farming
    • Science
    • Conservation
    • Motoring
    • Pets/Animals
  • ECONOMIX
    • Business News
    • Entrepreneurship
    • Personal Finance
  • EDUCATION
    • Education NEWS
    • Education OUR TOWN
    • Education INFO
  • Covid-19
  • EDITORIAL
Grocott's Mail
You are at:Home»Uncategorized»As certain as death and taxes
Uncategorized

As certain as death and taxes

Grocott's MailBy Grocott's MailFebruary 19, 2015No Comments5 Mins Read
Facebook Twitter Pinterest LinkedIn Tumblr Email

When the Finance Minister gets up in Parliament next week to read the Budget speech, it would be marvellous if he chanted to honourable Malema, “Pay us the money, pay us the money.”

When the Finance Minister gets up in Parliament next week to read the Budget speech, it would be marvellous if he chanted to honourable Malema, “Pay us the money, pay us the money.”

Nhlanhla Nene will be doing no such thing.

Instead, we will once again be treated to a rather dry view of the government’s financial planning for the year, delivered in South Africa’s 12th official language, that of economics.

So what does it mean to the ordinary person trudging to Checkers or Pick n Pay for the weekly shopping? First of all, the speech will be selective.

The Budget unveiling is also a political affair, like the State of the Nation Address, because it involves identifying where the money will come from for the promises made in the President’s speech to the nation, such as the R23 billion promised to help Eskom.

In the Budget speech, what is highlighted – the successes, the “challenges”, the spending on this and that and the other thing – is less important than what is left out: the lack of spending on this or that or the other thing.

For some of that, we can rely on experts who will comb through the Budget Review, the thick document that accompanies the speech and is thankfully now online and downloadable as a PDF.

Much of the spending plans were already announced in the Medium Term Budget Policy Statement or “mini-Budget” in October last year.

Still, further detail may be available in the Budget itself.

Some have been waiting impatiently for greater detail on how important changes to health policy will be funded.

Others want to see how much money will go to land reform. Most of us would like to know where the money is going to come from to keep the lights from going off too often.

In a nutshell, government can find the money it needs in a few ways.

Mostly, however, it has two choices: tax or borrowing.

The amount to be borrowed is determined by how much government thinks it needs to spend to keep the people happy and the country functioning and how much it can bring in from tax.

We already know that the government needs to cut this figure so that we don’t end up in a debt trap or make suspicious foreigners charge us more for new debt we raise.

So tax looms large in this budget, because government has not been able to get as much tax as it was getting before the global financial crisis of 2008-2009.

And we already know from the mini-budget that it needs around R44 billion more in tax revenue over the next three years.

This financial year alone it plans to get at least R12bn extra.

The extra tax money can come from several sources.

The most obvious is to raise VAT.

VAT is easier to collect and harder to evade than other taxes.

By one estimate, raising VAT by one percentage point (from 14% to 15%) could bring in around R20bn extra.

This will upset the unions and political groupings to the left of the ANC to the point of mass protest, and there is an election coming up.

However, it has to happen sometime, since we lag behind other countries in VAT.

Personal income tax is a harder, because money that goes to tax can’t be spent by consumers.

In a climate of poor growth, raising tax can make life harder by hitting the economy generally.

Taxing the rich may seem like an easy option, but the reason South Africa has so many tax experts is that the rich can pay for effective advice on how to avoid tax.

Corporate income tax is even harder.

Corporations cannot be relied on because even when they make a profit they have ways of arranging their affairs so that they don’t pay what they in theory should pay.

Putting up the fuel levy is easy, and there may be other smaller taxes to raise.

Sin taxes will inevitably increase. These will help, but won’t bring in the full amount.

One option is not to adjust the tax tables to catch up with inflation.

Individuals who are not actually earning more are taxed more.

This becomes punitive when an inflation-related increase pushed your salary into a new, more highly taxed, bracket.

My guess is that the Minister will go for increases on a range of taxes, though union opposition may rule a VAT increase out, unless it is accompanied by heavy tax increases for wealthier South Africans.

That’s dangerous too.

Popular belief is that revolutions always involve the poor, but, as any schoolboy or schoolgirl knows, the French Revolution was the work of the bourgeoisie.

The e-tolls debacle in Gauteng is already proof the middle class can stage a tax revolt, and it may not stop there.

Previous ArticleNew CEO for Amatola Water
Next Article St Andrew’s in T20 finals
Grocott's Mail

Comments are closed.

Tweets by Grocotts
Newsletter



Listen

The Rhodes University Community Engagement Division has launched Engagement in Action, a new podcast which aims to bring to life some of the many ways in which the University interacts with communities around it. Check it out below.

Humans of Makhanda

Humans of Makhanda

Weather    |     About     |     Advertise     |     Subscribe     |     Contact     |     Support Grocott’s Mail

© 2023 Maintained by School of Journalism & Media Studies.

Type above and press Enter to search. Press Esc to cancel.