Threat of tax revolt over government’s grant and pension plans

 ·19 Aug 2021

Trade union Solidarity has slammed the government for pushing high levels of tax in South Africa, including the high tax rate it continues to levy on fuel, and the latest Green Paper from the Department of Social Development (DSD) proposing even more taxes.

The union said that workers in South Africa are over-taxed and are “tired of paying more taxes for fewer and fewer services”. It has also threatened legal action against the latest proposals to take even more of workers’ income.

It said that the state constantly wastes taxes and resources, and officials keep finding new ways to draw in more funds – like the National Health Insurance or the DSD proposals for a 10% tax hike to pay for a basic income grant, and 12% of income being fed into a state-run pension fund.

Chief executive of Solidarity, Dr Dirk Hermann, said that South African taxpayers need to stand up against the government.

The union said it will be discussing proposals to develop comprehensive plans for a legal tax protest in the country.

“At best, the state is just inefficient and clumsy – but more, (these funds are) simply an excuse for looting and corruption,” he said.

“Apart from the new tax proposals, the tax rate is already high, and ordinary people have to incur expenses for which they are already taxed. On top of that, tax money is still looted at a large scale,” he said.

“We refuse to see how workers become slaves of the state. We are not working for the government; the government works for us,” he said.

Fuel taxes

Solidarity said that while the government keeps looking for new ways to tax the population, it is doing nothing to bring relief to taxpayers who are being ‘strangled’ by high inflation in categories like food and fuel.

Citing the Consumer Price Index (CPI) figures published by Statistics South Africa on Wednesday (18 August), the union highlighted that food and fuel inflation is higher than the headline CPI rate of 4.6% – especially with fuel becoming alarmingly more expensive with a rate of 15.2%.

Solidarity said that the high fuel price is one of the few figures that the state can directly influence.

Not only could the fuel price be directly affected by reducing the fuel levy in particular, but other prices – such as food prices – would also be significantly reduced, as the cost of getting items to consumers would be cheaper.

“People must travel, and people must eat. To incur these costs is unavoidable. Almost all products and services are also dependent on transportation,” said Theuns du Buisson, economic researcher at the Solidarity Research Institute (SRI).

“The effect of the fuel price thus has a larger impact and is thus more important than the direct impact thereof on the consumer.

Du Buisson said that the total tax of R6.26 (per litre) on fuel is much too high, and the state can adjust it downwards to provide immediate relief and promote economic growth.

He argued that the government can directly control it, and since it is one of the smaller contributions to the budget, it can definitely be reduced, especially considering there are countries that subsidise fuel consumption to stimulate economic activity.

“The total tax on a litre of petrol was R2.61 in 2011. The rate we are currently paying is completely insane. The government’s mentality that growth will take place through heavy taxes must be rejected.

“Instead of providing people and businesses with space to grow economically and creating jobs, they are suffocating the ability of households and the ability of suppliers and employers. The government must intervene where it is in power and take the necessary steps to alleviate the country’s burden,” Du Buisson said.

Read: Here is the expected petrol price for September

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