Every year, when the Minister of Finance releases his Mid-Term Budget Statement, I do a post about South Africa’s tax statistics. It’s freshly-revised for all the new figures that came out yesterday.
So here goes.
Who pays the tax?
Here’s a chart of income tax payers:
Here’s that, split into some income ranges:
Here’s the total amount of income tax collected for each of those income ranges:
And here is the average income tax collected per person in each class:
What about the other revenue sources?
Here they are:
One of the criticisms that I often hear is that focusing on “income taxpayers” is distracting from all the other taxes. From where I sit: company tax and dividend withholding tax are taxes on shareholders – who already tend to be income taxpayers. And the VAT and excise duties tend to be split proportionally across incomes, so those are also weighted towards income taxpayers. For more on this: How South African Non-Income Taxes Are Paid.
And how is government planning to spend that money?
Well, it’s going to be doing some borrowing as well. But here’s the spending plan:
On the basis of personal income tax, the top 1% or so (the 480,000 people earning more than R750,000 per year) pay 61% of the total income tax bill.
And I just want to point out that, by almost any standard, this is an extraordinary burden to lay on such a small portion of the population.
If we compare South Africa to the United States:
- Both countries pay taxes that equal about 25% of their annual GDP.
- But do you remember Mitt Romney and his “47% of Americans don’t pay any income taxes” comment that caused such an uproar?
- Compare that to our 87% who don’t pay income tax.
- And in 2010, the top 1% of taxpayers in the US contributed about 37% of the total income tax bill.
- Compare that to the 61% mentioned above.
Economic growth would help broaden that tax base.
But the current anaemic environment means a growing reliance on those 480,000 people.
Which is, you know, not good.
Rolling Alpha posts opinions on finance, economics, and sometimes things that are only loosely related. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha. Also, check out the RA podcast on iTunes: The Story of Money.