Home education is looking increasingly attractive

Working mothers often say, “I’m only doing this to pay for the kids’ education.” This is a South African tradition that goes back as far as private schools. But is it sustainable?

So mom gets up early and dolls herself up in expensive work clothes that were subject to VAT at 14%. Then into the family SUV that cost them dearly in VAT and CO² emissions tax. Then they pay a fuel levy while schlepping the kids to school and getting to work. Work all day and pay income tax, and pay all the way home.

None of these costs can be claimed against income tax any more, even if mom drives a company car or receives a travel allowance. Mom’s after-tax earnings are used to pay non-tax-deductible school fees. And 18% of the taxes paid are used to pay for a dysfunctional education system.

Eish!

Some say full-scale carbon taxes are still some way off. But we don’t have to wait for them to arrive – the fuel levy and electricity tax are already here. And it doesn’t take a tax nerd to predict huge increases in the short to medium term.

When Maria Ramos ran the national Treasury, she targeted a fuel levy at 35% of the price at the pump. But with oil increasing by more than R200 a barrel since budget day in February 2011, the pump price has increased by 30%. So the current fuel levy (R2.61/litre for petrol and R2.46/litre for diesel) is lagging far behind inflation. That’s always the first indicator of a massive fuel levy increase in a forthcoming budget.

This is all before the new toll systems go live in Gauteng in February 2012 (or the fuel levy has to be increased in the absence of tolls). And after that, the government has to consider a further levy to pay for new pipelines.

Add to that the prospects of increased oil prices, weakening exchange rates and higher taxes on fuel, and R20/litre within two to three years looks likely. That’s why the latest SUVs have a heated rear bumper – so the kids can push in winter.

The AA rates calculator currently calculates the running of a R375000 SUV travelling 25000km a year at R5.68/km – or about R56000 a year if you are schlepping the kids 10000km.

A couple of years ago, we heard of the first few South Africans self-educating their kids at home. The old-school teachers tell me that this is antisocial and the kids have to become mall rats to get any of the other stuff that goes with an education. And many parents would go insane if they had to endure their kids 24/7.

But many are talking of home education and university – and when they discover the savings, the movement will grow faster than the chorus of Alice’s Restaurant.

Originally published in the Sunday Times Tax Talk column.


No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment