Salary increases mainly get pocketed by the taxman
Take home pay has barely kept up with inflation while Sars’s take has mushroomed over the past five years, bank data shows
24 October 2018 - 17:51 Robert Laing
Picture: REUTERS
Employed South Africans, on average, received R15,299 in September, interbank payment service BankservAfrica said on Tuesday.
Following August’s 4.7% jump, caused by government employees receiving their annual pay increases backdated to April, the growth in average take-home pay slowed to 2.2% in September.
If inflation is taken into account, the average annual growth of South African salaries after tax and other expenses has only been 0.5% for the past five years, Economists.co.za chief economist Mike Schüssler said in BankservAfrica’s media release.
“Interestingly, the BankservAfrica data reveals that there have been minimal increases to the average take-home pay since September 2013 — providing a strong indication of the struggling economy in the last five years,” Schüssler said.
BankservAfrica’s take-home pay index shows that, while after-tax personal income has barely kept pace with inflation over the past five years, the amount companies need to pay their staff to achieve this has mushroomed as SA’s tax burden has escalated.
“Overall, nominal take-home pay increased by 45.3% while personal tax collections increased by 70.6% between August 2013 to August 2018,” Schüssler said. “While BankservAfrica’s sample size is a third of that of Sars, the large difference shows that personal tax collections, in effect, show a far higher tax rate mainly via ‘bracket creep’.”
