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Solly Moeng | So, what do we pay taxes for?

The difference between salary earners in South Africa and their counterparts in more developed countries is that citizens in the latter countries can see where their tax money is going, says Solly Moeng. 

A friend of mine, we shall call her Fatine, a single mother, shared her payslip with me the other day and, since seeing hers, I have seen a few other salary calculations in a number of social media discussions.

At the core of what Fatine told me, a concern shared by increasing numbers of other South Africans out there, is the difference between the gross salary payment and net salary, popularly referred to as the “take-home” pay. More specifically, it is the nature of deductions and the percentage of them that end up in government coffers through all forms of taxes, starting with Pay As You Earn (PAYE).

Now, some of you might be wondering, so what? Salaries all over the world start with a bigger amount, the gross payment, and go through a number of deductions, some of which are mandatory, before they end in the “net salary/take-home pay”. It has always been that way, it will always be that way, right?

There are even countries in the developed world, especially in Scandinavia, where the mandatory tax deductions are so huge that the take-home pay is always way below 50% of the gross salary.

Even after laying their hands on their take-home pay, citizens still part with more of their monthly earnings through value-added tax (VAT) and all forms of other levies as they try to dodge their way from the start of every month to its end. Increasing numbers of them, especially in the current Covid-19-infected economy, hardly ever make their journey from the start of the month to its end without shedding some tears and entertaining some seriously dark thoughts, driven by all levels of stress and depression when they look at their miserable material conditions.

Those who stop to do the calculations soon realise that the direct and indirect contributions from their meagre earnings to government coffers are actually even larger than it first meets the eye.  

The difference lies in how tax is spent

The difference, and herein lies the rub, between salary earners in South Africa and their counterparts in the more developed countries I referred to above is that the citizens in the latter countries are generally happy to make their contributions because they see where their tax money is going.

There are low, if any, levels of corruption (or there are immediate consequences for those behind it as soon as it is detected), the roads are neat and well-maintained, public services are delivered as promised, public infrastructure is well maintained, and so is public transport, which generally runs on advertised schedule. Sadly, not so in our 2021 South Africa.

In the sorry South African reality, Fatine is too rich to qualify for an RDP house and government grant, and too poor to qualify for a bank loan or bond. She is not alone. Many “middle-class” South Africans are too ashamed to openly talk about their situations. They have become the “missing middle”, regarded by the system to be too rich to qualify for any assistance, on one hand, and too poor to be trusted by the banks to be in a position to pay back any loans they apply for, on the other hand.

The truth, of course, is that many also suffer silently under the yoke of increasing debts they cannot come up with ways to escape; debts from loans they received from family and friends, debts from failed and failing small businesses, and debts from the same banks that are too eager to take away their cars and homes as soon as there are indications that the citizens can longer afford their monthly payments. Increasing numbers have also lost crucial insurance policies, including health cover, for failure to keep up with the monthly payments they can no longer afford.  

Suffering in silence

They all suffer in silence as they helplessly watch their lives deteriorate while people employed in government bodies continue to live large, especially those employed at senior management levels and their political bosses. The latter – especially those deployed by their political parties in local government, provincial government, national government structures and department, as well as in various state owned entities – enjoy generous access to bodyguards, expensive hotel stays, state housing, and luxury cars some have been reported to simply replace with new ones as soon as they see scratches on them or if they decide that they do not like the official to whom the vehicle was assigned before they took over.

They also benefit from free domestic air travel which many seem to abuse with abandon, as well as international business class at a whim, for trips that do not have to happen. All of this is funded by hard working South Africans who get very little in return for their “investment”, apart from high levels of arrogance by many employed by the state, poor services, and elevated levels of impunity by the politically shielded ones with dark clouds hanging over their heads. South Africa has been turned into a real Orwellian Animal Farm where the laws get imposed harshly for little offences committed by the poor and delaying tactics are put at play to shield the powerful, especially those connected to the political elite, when they commit crimes.

Slow-boiling pot of water

The levels of fatigue on the part of South Africans began over a decade ago, when those who could take their money out of the country to avoid paying taxes to a government run by people they could no longer trust did so. Over the years, individuals of all backgrounds – especially those with skills that can be sold in the open international market for special skills – also began to pack up and go. As all of this happened, the once thriving and happy to contribute tax base began to gradually diminish right in front of our eyes, but few bothered to pay attention as they were alerted to the slow-boiling pot of water we all found ourselves in.

When the coronavirus arrived and international travel restrictions were imposed, many found themselves trapped here, having to survive on their savings, many of which did not go far, as local trading and movement restrictions that often did not make sense were also imposed, further limiting their ability to make a living. Hundreds of millions or rand in so-called stimulus packages came and went with only small percentages of them going where they were most needed. PPE-related corruption has been exposed and, as I write this, not a single person has been tried and convicted as a result of the roles they are alleged to have played in it all. None of this gives confidence to hard-working, suffering South Africans like Fatine, whose meagre earnings continue to fund the lavish lifestyles of politicians who have not shown any sign of caring.

Until things change and South Africans live in the country they signed up for, at the dawn of our democracy – not the Animal Farm the country has been turned into – it is hard to see depleted trust levels in government returning to previous heights and all citizens with the ability to do so happily playing their part in the rebuild. Ethical, caring leadership is desperately needed. 

Views expressed are the author’s own. 

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