LETTER: A taxing dilemma
Deadweight taxes raise the average cost of living by R60,000 a year per family
So many advisory panels have disappointed on President Cyril Ramaphosa’s watch that his high-level economic panel risks failure too. To avoid this, they should be only tasked with determining why economists disagree so fundamentally on what to tax. Adam Smith’s classical school argues for a single tax on nature’s gifts, such as land and the spectrum. This is because they are inelastic (fixed in supply) whether taxed or not. Handfuls of Nobel prize winners concur. Frank Knight, founder of the Chicago school of neoclassical economics in the 1920s, denies the differences between man-made and natural assets. In his Risk, Uncertainty and Profit he argued that land has value because adventurers needed to be compensated for finding it and killing off the prior inhabitants. The state subsidises land prices when it chooses not to tax unearned rents. The less it taxes land, the more land prices rise. That is why landlords do not pay tax but advance cash to the SA Revenue Service and wait for ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.