20 May 2024 is Tax Freedom Day, this means that the average South African taxpayer stops funding government activity, and starts working for their own account. Picture: Freepik
20 May 2024 is Tax Freedom Day, which according to Free Market Foundation is the day when the average taxpayer has earned enough money to fulfil their annual tax obligation.
“Tax Freedom Day is the day of the year that the average South African taxpayer stops funding government activity, and starts working for their own account,” Martin van Staden, head of Policy, Free Market Foundation said.
According Free Market Foundation, from 1 January until 20 May, all the income earned by tax-paying South Africans is needed to pay for one year of government spending.
Think tank, the Free Market Foundation, has calculated and published South Africa’s Tax Freedom Day annually since 1997.
Tax Freedom Day is a measure of how much time taxpayers spend working to fund state projects.
Dr Richard J Grant, senior consultant, Free Market Foundation said: “If Tax Freedom Day were on 1 January, taxpayers would be paying no tax, and if it falls on 31 December, the government would be taking all of our incomes as tax and we would have nothing left. The later the day, the worse for the average taxpayer and for anyone who needs a job.”
According to van Staden, the later the Tax Freedom Day falls in the year, the more South Africans are taxed. This year, it is four days later than it was in 2023.
“Tax Freedom Day has been trending later and later into the year non-stop since we began the calculation in 1995. Progressively, government is taking more and more money from taxpayers, without concomitantly providing more and better services.” van Staden said.
According to the think tank, it's widely acknowledged that while some individuals lose more of their hard-earned income in taxes than others, the average, measured in days of the year, confirms what people intuitively know: South Africans are paying too much tax for a very low return on investment.
Van Staden said: “South Africa is a poor country, and the cost of living is only going up. Yet, for every rand we spend, a significant portion goes to government, when it could be going to our efforts to provide for ourselves and our families.”
“If the theory, that government provides important services that must be funded, was true, this might make sense, but most South Africans can attest to the fact that while we are funding a very large government apparatus, we are getting very little in return.”
Free Market Foundation said that despite the ever-growing tax burden on South Africans, government produces little to show.
If South Africans want to see economic growth, a reduction in taxes and an increase in the efficiency of spending must occur.
The current rate of taxation and its inadequate return on investment are not sustainable.
IOL Business
Related Topics: