Matthew Lester: Are taxpayers an endangered species?

All in there are about 25 000 Rhinos left in Southern Africa today.

And we drive around with the most extraordinary emblems on our cars to bring attention to their plight.

But there is another endangered species in RSA called the wealthy taxpayer. And it is critical that their numbers keep growing. Let’s look at their numbers per the latest SARS statistics package.

There are 54 million South Africans. In short there were roughly 17 million IRP5 certificates submitted to SARS for the 2013 year of assessment.

So there are about five times as many SIM cards in RSA than there are IRP5’s.

The 17 million IRP5’s are consolidated to 13 million individual taxpayers as some taxpayers have multiple income sources.

Of the 13 million individuals 6.6 million had PAYE deducted on some or all of their certificates (i.e. they were liable for tax) and 6.4 million only had PAYE certificates on which no PAYE was deducted.

The important point is that 6.6 million paid tax. That is significantly more than I previously thought and it shows the SARS commitment to broadening the tax base.

5.2million taxpayers submitted returns and were assessed tax for 2013. Of these:

  • 400 000 taxpayers assessed did not have any IRP5’s and declared business or investment income
  • 8m of the 5.2m assessed therefore had IRP5s

This means 2,2 million are still not assessed. But the vast majority of these are taxpayers below the threshold of being required to submit returns (R250 000 per annum).

Of the 5.2 million assessed taxpayers there were only 4 million with taxable income in excess of R60k and were thus liable for tax.

All of this represents a substantial and very significant broadening of the tax base from the 2004 assessed base when RSA worked on the draconian non-refundable SITE system implemented in the old RSA specifically to nail the lower income groups.

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Now narrow it down further. Only 418 099 taxpayers reported taxable income of greater than R500 000 per annum in the 2013 year of assessment. Then the question becomes how much of the tax burden do they carry?

Personal tax collections ‘PIT’ comprises 34,5% of total tax revenue. And taxpayers with income over R500 000 pay 54% of PIT. So that’s 18,6% of total tax.

Now go further. Let’s look at the very wealthy in the 2013 year of assessment.

There were 111 590 taxpayers earning more than R1 million per annum. 2 103 earn more than R2 million a year, more or less the population of white Rhino. And around 3 587 earn more than R5 million a year, less than the population of black rhinos.

But are they increasing in number? Yes! There were are 691 more taxpayers earning more than R5 million, 3 207 earning more than R2 million and a staggering 10 332 earning more than R1 million.

Moral to the story – the wealthy are doing better than the Rhinos.

But the wealthy population remains too small to take on the burden of all the additional tax that may be needed next year.

At social engagements we often hear the wealthy claim that their taxes hold RSA together. That’s simply not true. Nearly half the PIT is paid by taxpayers with income below R500 000 per annum. And everybody, even those on social grants, shares the burden of VAT and other taxes.

This article also appears on www.biznews.com


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