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EDINBURGH — I’m on the brink of joining the South African taxpayers’ revolt. I haven’t worked in South Africa for at least five years, but still the South African Revenue Service has ways of squeezing me as does the accounting firm I have to pay to do the paperwork each year. After staring into the cesspit of state capture and corruption each day, I have lost the will to be tax compliant. Still, rejecting tax commitments is a hard thing to do. It means getting a bad record for not paying one’s dues. The tax authorities can come after you, too – even if you are taking a stand on moral grounds that you no longer want to be a member of the small group propping up the Zupta empire. – Jackie Cameron
By Thulasizwe Sithole
The Davis Tax Committee report issued in September contains some details that underscore how a very small group of taxpayers is propping up Gupta Inc. In a nutshell, less than one in every 100 South Africans is contributing to one-third of all tax collected from individuals.
The report recommends that these individuals should be squeezed even more, although the committee has reservations about whether everyone who is classified as a High Net Worth Individual (HNWI) genuinely earns enough or has sufficient assets to be in that category.
The Zuma and Gupta families and their cronies are riding on the backs of the following people:
- Less than 108 000 people pay R74bn in tax. Put another way, that’s 0.6% of the registered individual taxpayers and 0.1% of the South African population who pay 30% of tax collected from individuals.
- The South African Revenue Service has just over 37 000 High Net Worth Individuals on its HNWI register.
- Of HNWIs, more than half are salaried employees who earn more than R3m, though there is no net asset criteria for this sub-segment.
- The SARS considers affluent individuals to be people who earn between R5m and R7m and have net assets worth more than R16m. One in every three among the individual taxpayers is on its list. Just over 10 000 individuals are registered as affluent and of these, less than 5 000 people have net assets of more than R16m.
- About 6 500 registered individual taxpayers have net assets of more than R40m or income that exceeds more than R7m.
- Less than 170 individual taxpayers have income in excess of R7m and net assets in excess of R40m
- Only 234 people registered as taxpayers can be considered ultra high net worth individuals
- While many people have tax numbers, less than 1% of the South African population of 54,5m – less than 10% of taxpaying individuals – contribute more than half of the total tax paid by individuals.
Individuals contribute more to Gupta Inc than business
- The 2016/2017 tax review indicates that individuals contribute nearly 40% (R440bn) of total taxes;
- Companies pay 17% into tax coffers (about R200bn);
- VAT contributes about 26% (R300bn) to total taxes.
The Davis committee has recommended squeezing these taxpayers even more:
“Adopting the 80:20 principle, concentrating resources on identifying individuals in this category, and ensuring they are paying the right amount of tax, will undoubtedly bear fruit for tax collections. As indicated, SARS has recognised this and, in its compliance programme, launched in 201226, which included seven priority areas for compliance improvement, the first item on the list was “Wealthy South Africans and their Trusts”
It recommends focusing on identifying and coding HNWIs “in order to facilitate resource planning and ensure that, due to the size of their contribution to the economy, focus is placed on them, both from a service as well as an audit perspective.”
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