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Dreaming of a better tax deal for all South Africans

Dreaming of a better tax deal for all South Africans

CAPE TOWN: Budget time and as usual taxpayers read stories that taxes will again go up. As usual, fear is peddled everywhere that taxes are going to go up at rocket pace.

But when the worst does not happen relief creeps back; only like the frog in the frying pan, we are slowly cooked for more.

The normal spin-cycle kicks in from the national Treasury as journalists, who are locked in a monopoly vice for a few hours, emerge with a few sensational points to boldly announce that taxpayers have escaped the worst.

The South African tax burden is one of the highest in the world. Tax revenue to gross domestic product (GDP) – excluding social security taxes as our pensions are private – is among the top 10 highest countries in the world.

Moreover, the average world tax burden is 15percent, while South Africa’s is 27percent. The International Centre for Tax and Development shows that total government revenue in South Africa is close to 38percent of GDP, which is 57percent above the world average.

Taxpayers have less money now than stones have water. So the first thing I would like to see is that the tax burden gets eased.

Total government revenue grew 27.7percent in 1994 to 38.4percent in 2016. Include state-owned enterprises and we have more than 45percent of the GDP going to the government.

That brings me to the second wish. That is that the government becomes more efficient. We are one of the highest-taxed countries, yet we get very little in return.

The Treasury cannot be the only world-class department fighting a losing battle as taxes are wasted by the other departments.

For example, South African education comes near the bottom of the class.

In public education the current world average learner-to-teacher ratio is 24 children to a teacher.

In high-tax OECD countries, this average drops to 14 children a teacher. South Africa is at 32 children to a teacher and has twice the high-tax country average with 33percent more children a teacher than the world average. Our education quality is poor, as the world test score reveals.