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SA’S PROBLEM OF A NARROW TAX BASE AND HIGH TAXES Analysis of collections by SARS shows why things are not working in SA. Contributor Adriaan Kruger, Moneyweb | Wednesday, 08 January 2020, 13:55 Source: -and-high-taxes-202001081025 originating from Fewer than 3m people in a country with a population of 56m paid 97% of all personal income tax collected in the 2019 tax year. NATIONAL NEWS - One of the first paragraphs in the annual tax report published by National Treasury and the South African Revenue Service (SARS) gives one of the main reasons why public infrastructure is deteriorating and living standards for a large section of the population are falling. “In the last few years, SA’s economy has significantly underperformed. Economic growth has lagged behind global and emerging markets, real GDP has grown slower than population growth for five consecutive years and our current GDP performance on a per capita basis is the weakest since the 1960s,” according to the authors of Tax Statistics 2019. The figures supplied by the authorities show the stark truth: a handful of taxpayers cannot afford to fund the hospitals, schools, roads, libraries, water networks, postal services, police protection and a range of social grants for a population of 56 million (and increasing). Although the number of individuals registered for personal income tax increased to more than 22 million at the end of the 2019 tax year, this is misleading as most of the registered taxpayers do not pay any tax. The high number of taxpayers on the books is purely the result of a change in tax policy that require employers to register all employees with SARS even if their salaries are lower than the threshold that will oblige them to pay tax. At the time the report was written, SARS expected only 6.6 million taxpayers to submit returns and by August last year some 4.9 million taxpayers had done so.

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