Tax Freedom Day – how much do we work for the government?

We complain about a lot in South Africa. One of our favourite bugbears is the tax that we pay. And although our tax rates are comparatively lower than some Scandinavian countries, the problem that we have in South Africa is that we perpetually feel as though we simply do not get bang for our buck. Ever. Especially when blighted by highly publicised, shamefully poor health and education systems, which are aggravated by baby-elephant-potholes and awe-inspiring tales of corruption.

The below excerpt is an interesting insight into how many days a year the average joe spends working for the government, and where that money goes. We know that it's mostly to education and heath… which makes one wonder what exactly the problem is? It is refreshing to note, however, that despite all of our tax related woes, we do at least work marginally less for our government than some other countries do. – LF

Last week on the 22^nd of May South Africans would have worked 141 days this year to pay their taxes to the government as the country takes longer to achieve its tax freedom day (TFD).

TFD is the day citizens have worked long enough to pay their taxes for the year, and in 2014 this is two days later than last year and some five weeks later than in 1996, making it the latest date in the nation's history.

South Africans pay 38.6% of their income on tax, and it is interesting to note that for the 2013/14 financial year, R899.7-billion was given in taxes and only R270-billion was spent on clothing, food and beverages.

However, the government had taken steps to alleviate the tax burden in the past decade, such as  reducing corporate income tax from 40% to 28%, and the top marginal rate for personal income tax was reduced from 45% to 40%.

While analysts say that the later TFD date has arisen as a result of an "election budget", among other factors, research by financial services company Direct Axis shows that South Africans are still reasonably placed when compared with other nations.

In Sweden, for example, tax freeedom day fell on July 4 last year, meaning that country's citizens worked almost half the year for the government.

Last year the UK (May 30), France (June 19) and Italy (June 7) also took longer to achieve their respective tax freedom days.

Analysts say the only way for government to fund its spending is to raise taxes, one of the main reasons why TFD is occurring later each year.

The Direct Axis research shows that of this year's R1.25-trillion budget in South Africa, education will take the biggest slice (R253.8-billion).

General public services will be allocated R180-billion, and health R145.7-billion.

What is also interesting is that tax revenue increased from R113.8-billion in 1994 to R899.7-billion for the last year, and tax revenue is estimated to be R1,099-billion for the next year.

For further information, visit https://www.directaxis.co.za/topics-tips-tools/tax-freedom-day