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South Africa’s tax burden rests on a few

South Africa’s tax burden rests on a few

Lessons for SA’s tax policy from the UK Budget – 'as you sow, so shall you reap'

A must read article by Alec Hogg, published in BizNews on 30 October 2018

Given my background, it was hard not to compare yesterday’s UK Budget with last week’s one delivered by SA’s new finance minister Tito Mboweni. If there is one thing that Team SA should be pondering long and hard it is the comparable tax bases.

In the UK, 32 million people pay income tax. In SA, almost 90% of the income tax burden falls onto the shoulders of less than 2m people. The population of the two countries is similar.

Given this disparity, SA should be trying to attract as many new taxpayers as it can. And tenaciously holding onto those golden two million, the envy of every other African nation. Instead, for most of the past decade a racially charged atmosphere has encouraged many taxpayers to slip away.

Another interesting point: I couldn’t help noticing that particular penny has dropped in the UK. Top British earners were looked after via a 5% increase in the personal tax allowance and an 8% rise in the top tax threshold. In SA, the trend has been in the opposite direction. As you sow, so shall you reap. Countries too.

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