In America the population is collectively on edge at tax time because 140 million people file tax returns out of a total population of 310 million. Of course not everyone who files, pays taxes, but at least all these folks share in the annoyance at filling out (or paying someone else to) the ever-changing, mind-bogglingly complex, 1040 form.
Here in South Africa, I learn that the South African Revenue Service just announced that there has been a 13.8 percent increase in the number of tax returns filed. A record of just over four million tax returns were filed, up considerably from just over 3.5 million in 2010.
South Africa’s total population is well over 50 million. So less than 10 percent of SA’s population is paying for the other 90 percent. But of course, individual taxpayers only cover 35 percent of the government’s budget, while 45 percent comes from the VAT (value added tax) and corporate taxes.
On the other hand, the five million taxpayers likely pay most of the VAT and as Business Times columnist Stephen Mulholland points out, “the more prosperous among the five million also relieve the state of the burden of health costs, education for their children and, in many cases security in their homes.”
The last place you want to go for health care is a government hospital, I’m told, and the walls around the home where I’m staying in Johannesburg are a good 10 feet high, with electric wire at the top. The neighbors have a generator anticipating the frequent power outages.
Roughly one million people work for the South African government, so after those people are netted out, it is really four million people paying for a South African government that spends 50 percent of its budget paying its one million workers. And, while public workers have enjoyed wage increases, SA’s infrastructure crumbles, as little is budgeted for providing the services government insists on providing.
Living in South Africa means learning to live with sporadic brown outs, despite rate hikes of 25 percent each of the last three years. In every city we have visited, the power has gone off for extended periods of time, making it especially uncomfortable, for instance, in sweltering Durban.
But while our hostess is extremely annoyed at her government’s ineptness at keeping the lights on, there just aren’t enough taxpayers like her in this democracy to carry any weight.
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Mr French, are you in South Africa at the moment? If so, welcome.
Will you be speaking at any events, perhaps facilitated by the Free Market Foundation? I havent seen any publicity…..
One man one vote Democracy is a wicked and evil form of mob rule and always bankrupts itself. Just look at what happened in Rhodesia. With that said,what is happening in South Africa has happened over and over again throughout history. Basically its what happens when the inmates take over and are running the asylum. I am sad to say that the same thing is now happening in America.
Rhodesians and citizens of SA had forced conscription back in the day (70′s and 80′s) contributing to a broken window condition. These days the income taxes and civil violence kill more people than the Bush Wars combined. From what I hear from Rhodies turned S. Africans, JoBerg is a war zone in many parts. SA is a few years behind Zimbabwe…and as far as infrastructure goes many places on the mainland (USA) and insular areas are eroding and deteriorating steadily. It looks like a global phenomenon. The bureaucrats are living high on the hog in all these countries.
It is even worse than Mr French states in this very welcome article. According to our calculations about 1.6 million South African taxpayers pay about 80% of income tax. These 1,6m also pay the largest share of VAT and are the ones burdened directly by company’s and other tax.
In 2009/10 the bottom 29.2% of income tax payers (with an annual taxable income of less than R100 000 or $13 000) paid about 5,6% of their taxable income as income tax. Source: Own calculations at Solidarity Research Institute.
Mr. French
Thanks for highlighting the plight of the SA taxpayer. I shudder at the amount of tax I pay each month to a government that truly and utterly squanders every penny. The other day in Joburg we temporarily lost water AND electricity. Also, thanks for making the point that the usual ’5 million taxpayers’ nonsense fails to net off the amount of state employees, who of course are merely tax recyclers not taxpayers.
According to stats I’ve seen there are 1.3 million state employees (perhaps this is French’s 1 million + provincial and local govt). Anyhow, that leaves 3.7 million taxpayers, many of whom have only marginally slipped into the first tax bracket and pay minimal tax. But it’s not that our taxpayer:tax consumer ratio is so lopsided, but that the taxpayers see even a far lower proportion of their tax back in the form of ‘government services’. The major taxpaying areas of SA are falling into a state of disrepair.
People often say that Sweden pays among the highest tax in the world. I disagree. While the Swedes pay heavy taxes, they see a lot of back in the form of (admittedly less efficient) government services. In SA, taxpayers not only pay around 25%-40% of their income on tax, they are hit with 14% VAT, 13% CGT, soaring municipal rates and taxes, and soaring energy costs. In addition they fork out, as Frech points out, for their own security services and increasnigly for making provision for the crumbling state energy and water infrastructure. In return they get roads that look like patchwork quilts and some garbage collection.
Sad indeed. Why do we stay? Because Africa is just too cool.
@victor: JHB is no war zone, its just ridden with crime, most of which takes place in the halls of power. According to the Heritage Foundation SA is getting worse, not better, on its corruption score. We are slipping down ranks of global economic freedom.
My apologies to your fair city, it has been more than 30 years since I’ve visited Joburg; outside of the airport. As I said, I am just reporting based upon my Rhodie mates’ experiences in JoBurg. The statistic one mentioned was 1 in 2600 persons is done in by homocide (vs. about 1 in 7000 in Iraq). Many would argue that Detroit is a “war zone.” After reading the news a few days ago I am not in disagreement with these sentiments:
http://www2.timesdispatch.com/news/2012/feb/26/tdmain03-national-briefs-for-feb-26-ar-1716501/
Mr. French should visit Detroit.
To visit the nationalized auto industries of America?
Related: Progressive Chestbeating: http://thinkprogress.org/progress-report/we-didnt-let-detroit-go-bankrupt/?mobile=nc
Same thing in Canada. The salaries, benefits and pensions of white-collar government workers are sucking more and more out of the economy and the infrastructure is crumbling from neglect. Real estate development projects are being jammed into the existing infrastructure which overloads the traffic, electricity, water, sewage, etc. The reason why, apparently, is that the municipalities are having more and more difficulty meeting their massive payroll and pension bills. So whenever a new development occurs they take the huge development fees and instead of building the infrastructure for which the fees were intended, simply shovel the money into the hands of their current and retired white-collar workers.
And the big joke is that this tiny taxpayer base, who fund the welfare state, the gubberment and their lackys, and the deluded spending of those in power, are almost universally hated by white liberals, the government they fund and the black population at large. These people would love nothing more than to strangle the very lifeblood out of the middle class, but at some level they get that this would spell the end for these same groups, so they make do with a slow, steady strangulation while taking every opportunity to remind us all how guilty we should be feeling for their predicament. Drive a new car? How Dare you when there are people living on welfare money from your taxes!
I like the take yesterday on the “there are to few taxpayers” issue from the Mises blog http://blog.mises.org/21154/many-americans-dont-pay-income-tax-is-this-a-bad-thing/. This issue is not that “less than 10 percent of SA’s population is paying for the other 90 percent”. This issue is that government is spending any money, employing anyone, and taxing anyone at all. I know Mr. French understands this too. I just liked that blog.
South Africans reading this, please consider joining us at Mises.co.za. Amongst other things, we’re looking for Mises.co.za associates and can offer contact details for monthly libertarian meetings in Cape Town, Johannesburg and Pretoria. Send chris@mises.co.za a mail.
I spent most of ’06 in South Africa, looking for coal. I stopped going as the Rand had lost one third of its value against the €uro within that year (it went from about 6 to over ten Rand to the dodo), making it unviable.
I got out before the rolling power cuts began, but even when I was there, the guys on the coal mines could get two to three times what the power stations around Middleburg and Hendrina were paying, just to load their coal onto a train to go down to Richard’s Bay for export.
Part of the power cuts story was over-printing of Rands, making export of coal more attractive.
The other part, was the amount of un metered electricity supply going into the townships and slums. Those guys were expert in tapping into the supply lines, there were also some experts in stealing several miles of supply cable in one go.
The places where the money was spent were obvious to see. Any hole in the road required at least a dozen people to dig it and wave flags around it, and the Middleburg to Belfast road had no shortage of natural holes too.
Any meeting with council employees, brought a great party of them out, all in council cars, they were often late in arriving, because they’d use the council vehicles as taxis when they could.
I was going to open a bank account, however I needed all sorts of documentation proving where I lived, where I worked, what I ate for breakfast, why, I really don’t know.
Oh yes, there was also the spate of mass shootings – by cops going postal on their colleagues with their works guns.
I’ve got to say, it was a fantastic place to be, but it was a shame to see the politicians engaging in capital consumption.
I must say , other than the brief period on early 2008 when both nuclear reactors were offline, and we faced about four power cuts of a few hours each spread over a month or so, I personally havent been materially affected by powerouts since – Perhaps once in the last 2 years, and that was for maybe half an hour. And that goes for both JHB and Cape Town , where I spend alternate weeks.
the price however has probably more than doubled since 2008 in several increments, which I dont see as a bad thing: it merely goes some of th eway to undo the artificially underpriced regime we have long had, itself engineered by years of policy intervention to encourage FDI by aluminium smelters (essentially a method of congealing large quantities of cheap electricity into shiny ingots of expensive metal). And back when it was most necessary to raise prices in early 2008, they made a point of NOT increasing them! Had that been done quickly, the most critical point-in-time shortage we experienced would have solved itself instantly. But it wasnt so it didnt.
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