Transactions are a tax target, it will get worse

For many years, St John’s College in Johannesburg did not have a school bus. Spare cash was spent on stones and mortar. Sporting occasions were confined to nearby schools.

The exception was the bi-annual pilgrimage to Pretoria Boys High. Buses were hired from the railways and teams arrived high on exhaust fumes.

One year, legendary rugby coach Max Burger rented a Silver Eagle bus to convey his beloved rugby teams to Pretoria. But it arrived early and was innocently co-opted by MacPhail, the hockey team coach, a modest man who thought he had scored a free upgrade. Burger’s rugby teams arrived very late in MacPhail’s bus, routinely used to ferry prisoners to court.

Back in those days, the tax system granted additional tax rebates for taxpayers with more than four children.

Today many prominent schools have a rugby festival. Nearby schools are considered to be of minor attraction. And costs seem incidental compared to parents’ entertainment.

A return air ticket from Cape Town to Johannesburg represents 0.3 carbon emission tons (CET). So a rugby tour for 20 will emit six tons. At R120 per CET, an additional R720 per team would probably be less significant than a broken rugby boot.

But it all adds up. Many privileged school children will use two CET just commuting to school. There can be few with a carbon footprint of less than the national average of 11 CET. That’s a potential CET exposure of R1,320 per annum per child.

Tax seminars often contain the question: “Is it still possible to save tax?” The response is that most of the loopholes surrounding income taxes are closed. But that only represents 55% of the total tax base. The rest is mostly transaction taxes.

Governments have simply cashed in on the frenzy of consumer spending that has emerged since the 1980s.

So home becomes a partial tax haven dependent on food and electricity consumption. Malls, cars and the kid nag factor have become substantial tax targets.

Originally published in the Sunday Times: Money & Careers Tax Talk column.

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