When you work … officially … you get taxed. The more successful are taxed higher.
Extraction happens through internal revenue whose employees make nothing and provide no useful service. Few know how much is left after this bureaucratic monster and its daily (in South Africa) reported shenanigans have had their bite. As it is South Africa is short on cash[i]. Every cent SARS takes-wastes shrinks the producer-factories, offices and shops, food-markets and service providers, because there’s less cash circulating.
Tax time is when poorer taxpayers attempt to understand complicated legislation-regulations to concoct loop-holes while the wealthier engage many of our top financial brains to massage final taxable amounts. The legal-avoidance sector’s GDP-churn is huge and like the daily traffic jam, unnecessary, wasteful and terribly negative[ii].
Why tax income?
I exploded in my posts on the ease of creating jobs[iii] - which fuel growth, on the requirement that developing nations embrace Modern Money Theory - to issue project money[iv] to build all we need, and on the government’s responsibility to take back the duty to create money. The private banks have no right to be there[v] - not alone anyway.
Once people have decent jobs, decent clinics and schools and leisure time/areas, all of which facilitate basic living, then not only will they be able, but they’ll also be willing economic participants.
That done we don’t need income tax.[vi]
Contributing … that’s it
In the days when the savannah grass tickled as our ancestors ran to catch dinner, or to avoid being dinner, we lived within the spirit of the Communal Family (lately called Ubuntu). It invoked an auto-capacity to share for safety, group improvement and growth. The dumbest, smartest, weakest and strongest all contributed … guarding, hunting, teaching, building, breeding and a little thinking.
Since then we’ve evolved through kings-made-by-gods, conversion to republics and into Corporacy dominating business models hidden behind a façade of democracy. The system needs change once again; a re-simplification of all that we can. In this complex hierarchical world of cleaners and religious myth-makers, the middle, and doctors and rocket scientists, heading the list for simplification is …
‘Make tax easy and treat money as an enabler’.
Three factor tax …
1. Behaviour modification
To drink, smoke, take crack, consume sugar and gamble (more I’m sure) is an individual choice, but the activities cost the nation. Contribution best happens through taxation at the point of purchase and at the place of rehabilitation be it hospital, the work-place disciplinary committee or jail.
Keeping the Rand in the Rand Monetary Area is vital to South Africa. Every Rand that leaves is a Rand not circulating. All imports must be taxed even if the tax is just to remind us we need to look for replacement products, and better still, as happened in the final days of apartheid-sanctions[vii], to produce our own.
The less critical the item is to economy the higher the tax. For example, tax on the imported super-car needs to be super high. Likewise those chickens Obama forced on Zuma. And, apart from the stupidity of challenging Climate Change, we don’t need someone else’s apples either – tax them at the till. The same applies to the “investments” exported to Tax-Havens, overseas holiday money, dividends and overseas sourced loans - tax them to the hilt.
Tax all non-productive ‘saving schemes’ like for example, share buy backs and the vast sums sitting in corporate accounts that should be in use somewhere[viii].
Fuel is a double issue … money going out and pollution going up. We waste – teach us - hit it hard.
2. Nation growth
As SA isn’t just a developing country but one that has fallen behind the progress-curve a vastly deeper commitment to speeding up education, training and family-community rebuild HAS TO HAPPEN. Adopt a steeply progressive consumption tax[ix] [x].
Totally tax free would be all basics, from food items through to government supplied education, clinics, commuter-to-work trains and busses and so on. Progressively higher tax on luxury items from fine foods to designer jeans-and-gyms. Owning one’s own home would fit here. Consider it both a hit on wasteful production and a modern contribution from those able to afford life’s niceties.
It happens when eating at that smart restaurant on the promenade-deck in the Cape Water Front. The F&B bill includes the cost of the restaurateur’s rent, services and staff, and the ambience, the clean public toilets and car-guard. The same applies by ratio to the R5-a-plate sadza and gravy in the corner in the little supermarket in Stutterheim[xi].
Motivationally and morally it is sound to pay some tax for 1st World standards so in 3rd World areas the country can gradually move towards better service/quality/ambiance … what can be fairer than reducing the need for crime?
Well … the restaurant bill shouldn’t start with the food but with a charge for the use of the enormously expensive and well planned road network that gets a diner to dinner … that is a definite. Somebody needs to teach the ANC how to run a toll! Money in – lift boom. Lower boom.
3. Wealth fair-contribution via property tax
Annual property rates (as opposed to purchase tax) must reflect and cover the value of the property and services provided be it in a suburb, township, smallholding zone, industrial area or the wide open government and farm lands being created by President Ramaphosa.
The farm-free-getters in terms of the ANC’s jerk-a-vote arrangements need to appreciate the land needs to be used well enough to pay substantially towards their roads, rail-points, electricity and SABC connections.
There is no longer any need to feel at all guilty. It’s about the Middle Class doing its bit while cutting out the traditional waste as it makes it neighbourhood safer, nicer.
 Given the enormous equality gap SA has it is worth considering a loaded percentage applied to all properties over a certain value with the cash so raised going towards SA desperate needs – how about facilities and teachers for children identified as suitable for fast-track education into science, technology, engineering and maths?
[i] https://businesstech.co.za … A shocking number of South Africans can't afford even a basic food
[ii] In a backhanded way SARs acknowledges tax is ridiculous as illustrated by allowing taxpayers “deduct total contributions to a pension, provident or retirement annuity fund, up to 27.5% of your taxable income” with a limit of R350,000 per annum. https://www.dailymaverick.co.za/article/2018-07-26-let-the-taxman-help-you-feather-your-nest
[vi] Prof Stephanie Kelton @ https://www.youtube.com/watch?v=qoCBuILKjLc
[viii] (Since) “2000,” they noted in a paper updating the data through 2014. Since then, income growth within the top 1 percent has accrued to people who make their money from owning money, stock, and other financial instruments, rather than to people who make their money via skills and labor.” https://www.vox.com/the-big-idea/2017/11/16/16665604/republicans-tax-reform-labor-capital-wages
[x] Gary Johnson on https://www.youtube.com/watch?v=7XZHFwXvxsY
[xi] Eastern Cape … I’m sure the price has gone up.