LETTER: SA’s economy is third most miserable in world due to tax
SA’s sum of tax rates on its corporations, its individuals — top marginal rates — and VAT was 88% in 2021
26 August 2021 - 16:23
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A man jogs below Eskom's electricity pylons in Soweto, Johannesburg. File photo: REUTERS/SIPHIWE SIBEKO
Mineral resources and energy minister Gwede Mantashe, the ANC’s coal junkie, told parliament on Tuesday that it would be economic suicide “to close down coal power stations prematurely as that would not support the country’s developmental needs” (“Gwede Mantashe says developmental needs eclipse Eskom’s green dream,” August 24).
That is pretty rich considering that in 2020, Bloomberg calculated the ANC’s economy as the third most miserable in the world, just behind Argentina and Venezuela. The least miserable are Thailand, Singapore, and Japan.
According to Trading Economics data 2021, and to common sense, countries with low taxes on work, investment and consumption are richer than others. SA’s sum of tax rates on its corporations, its individuals — top marginal rates — and its VAT amounted to 88% in 2021, compared to 46% in Singapore. Such tax friendliness resulted in foreign direct investment in Singapore 28 times higher per working age capita than SA. And, ignoring inflation, GDP growth per capita of eight times more between 1996 and 2020.
Yet Singapore has no agriculture or mining sectors. Ipso facto, if SA had no coal mines and no taxes on citizens’ hard-earned wages, salaries, interest, profits, dividends, rents, capital gains and consumption, we might start competing. For then SA would have to rely on land rents for its revenue. Those are a user charge, like rates and taxes, and do not distort the economy.
As a by-product, land rents reduce the entry cost of land to an affordable rent, as section 25.5 of the constitution demands. Compensation for the loss of land values lies in citizens being relieved of all taxes on their work, investments and shopping.
Peter Meakin, Claremont
JOIN THE DISCUSSION: Send us an email with your comments. Letters of more than 300 words will be edited for length. Send your letter by email to letters@businesslive.co.za. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: SA’s economy is third most miserable in world due to tax
SA’s sum of tax rates on its corporations, its individuals — top marginal rates — and VAT was 88% in 2021
Mineral resources and energy minister Gwede Mantashe, the ANC’s coal junkie, told parliament on Tuesday that it would be economic suicide “to close down coal power stations prematurely as that would not support the country’s developmental needs” (“Gwede Mantashe says developmental needs eclipse Eskom’s green dream,” August 24).
That is pretty rich considering that in 2020, Bloomberg calculated the ANC’s economy as the third most miserable in the world, just behind Argentina and Venezuela. The least miserable are Thailand, Singapore, and Japan.
According to Trading Economics data 2021, and to common sense, countries with low taxes on work, investment and consumption are richer than others. SA’s sum of tax rates on its corporations, its individuals — top marginal rates — and its VAT amounted to 88% in 2021, compared to 46% in Singapore. Such tax friendliness resulted in foreign direct investment in Singapore 28 times higher per working age capita than SA. And, ignoring inflation, GDP growth per capita of eight times more between 1996 and 2020.
Yet Singapore has no agriculture or mining sectors. Ipso facto, if SA had no coal mines and no taxes on citizens’ hard-earned wages, salaries, interest, profits, dividends, rents, capital gains and consumption, we might start competing. For then SA would have to rely on land rents for its revenue. Those are a user charge, like rates and taxes, and do not distort the economy.
As a by-product, land rents reduce the entry cost of land to an affordable rent, as section 25.5 of the constitution demands. Compensation for the loss of land values lies in citizens being relieved of all taxes on their work, investments and shopping.
Peter Meakin, Claremont
JOIN THE DISCUSSION: Send us an email with your comments. Letters of more than 300 words will be edited for length. Send your letter by email to letters@businesslive.co.za. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Gwede Mantashe says developmental needs eclipse Eskom’s green dream
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