Tax in South Africa with hidden fees

A new report of Trade Union Solidarity focuses on the tax burdens of prominent members of South Africa’s income groups. 

For further clarification, a new term is shown here. The union divided the statistics of South Africa into ten equal parts known as decile. The usage of this will compare the accommodation, food, transport, and other taxes. 

The people who have a gross monthly income of R640 are lie in decile three and below. And for the sake of practicality, these people are below the breadline. And for such people exceeding up the basic need with such low income is very much impossible. There 38.67% of income is spent on food and 25.67% on housing. 

The average person of decile 3 contains an effective tax rate of about 7%. And this happens due to VAT and many other taxes.  

The people of decile 9, having an average monthly income of R8,746, live a lavish life compared to 80% of the country’s people.

Tax-free?

In the gap of South Africa’s income tax bracket, this income escapes many people from the spectrum of the taxes. Many people still have not to pay any taxes due to such low income. 

However, people of decile 9 spend a considerable percentage of amount on their food and housing. And the most tax which occurs on them is in the form of transport. People in decile 9 pays more tax in petrol levy as compare to the income tax. 

Despite having low incomes, the people of decile nine still have to pay the tax burden of 16%. This means if any person is working in the traditional 8-hour workday, he is only working 6 hours and 43 minutes for his own. The rest of the time is working for his state. 

The person earning R70,000 as his gross income will lie in the highest decile in terms of revenue. But he will lie into the second tax bracket. 

Due to South Africa’s income tax policy, the individual of this decile is already paying a substantial amount of income tax. But if we focus on the payment of VAT and any other taxes, then he’s paying more than 50% of his income tax amount to the state. 

The tax burden on the individual of decile 10 is 42.5%. This means that if the person of decile ten is working 8 hours a day, then he’s working 3hours 24 minutes for himself. And rest for the state. 

Also Read: How Cryptocurrency Can Help Nigeria’s Economy? 

Hidden Tax

The other countries try harder to limit their income streams for the liberty of the citizens. At the same time, the South African government has tried its best to extract taxes from citizens. In every possible way. However according to the trade union, the South African government charges from every single corner. From interest to distributed TV licenses. 

How South Africa differentiate 

South Africa stands second to Sweden at 26.7% after comparing the total tax burden to the GDP with the rest of the world. The Swedish State became the prominent service provider after reconstructing the tax sector and public service sector. One of these excellent services is the pension service. In addition, this service provides help for living a good standard life after retirement. 

Also opened many training programs for the unemployed youths. 

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