The hypocrisy of dividend and personal income taxes

The hypocrisy of dividend and personal income taxes

Dividend withholding tax and personal income tax can do immense harm to the economy through their dissuasion of savings and investments - leading to fewer jobs and reduced welfare.
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By Mpiyakhe Dhlamini *

Taxes are never pleasant, but they can do a lot of good if used in the right way, such as providing access to education and healthcare for the poor through vouchers. Taxes can also do a lot of harm by dissuading savings and investments, which ultimately leads to less jobs and a reduced ability for people to take care of their own needs. This is especially the case when it comes to dividend withholding tax and personal income tax.

The dividend withholding tax is an instance of double taxation. As a shareholder of a company, the profits of the company will go towards one of two things: increasing the equity you have in the company through increasing the assets of the company or reducing the debt of the company, or it will be paid to you in the form of dividends. But before the profits are used to increase your equity or pay you dividends, governments will tax these profits at a rate of 27%.

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