While there is much fanfare from SARS about how easy it is for South Africans to be good taxpayers — thanks to e-filing — it’s interesting to note how much being good at paying your tax in 2012 will cost you compared to, say, 10 years ago.
In an annual salary survey published early in 2012 it was found that the average income of a South African taxpayer is R260 820 per annum. Assuming a six percent annual increase in line with inflation, it would mean that, on average, South Africans taxpayers earned R154 379 per annum in 2003. That is a cumulative increase of 68.95 percent over the period.
Assuming that these average incomes are also the taxable incomes, the average South African’s tax bill for 2012 would amount to R45 241 while for 2003 it would have been R37 222. The average tax rate for the average South Africa is therefore 17.34 percent in 2012 while in 2003 it was approximately 23.96 percent.
"From these simple calculations it can be deduced that the average tax rate per person in South Africa has decreased by almost 27.5 percent since 2003, at the average income level," says Dirk Kotze, Partner at global audit, tax and advisory firm Mazars.
"With the marginal tax rate at the maximum income level also remaining at 40 percent, and the tax brackets steadily increasing each year, it would be easy to assume that South Africans are less burdened today than they were a decade ago. It’s even much easier to file your tax return as well," Kotze says.
The tax tail should not wag the financial dog, however; other tax related costs should be considered when determining the average tax burden of South Africans in relation to the abovementioned incomes.
In 2003, the average taxes on unleaded petrol totalled R1 per litre, as per the Annual Report of the South African Institute of Professional Accountants (SAIPA). In 2012, this was budgeted at R2.61 per litre. Assuming that South Africans travel the same distances to and from work in 2012 as they did in 2003, that is an increase in fuel costs of 161 percent without even considering the oil price or US$ exchange rate. There is also the threat of increased toll road charges hanging over the heads of road users, especially in Gauteng.
Due to Eskom’s woes, as well as the need to stimulate a green economy, National Treasury also introduced an electricity levy a couple of years ago and while it is currently at 3.5cents per kilowatt hour of electricity it is another tap that has been added to the system and that has opened slightly every year since then.
Article continues on page two...