Eunomix chief economist Claude de Baissac has warned that South Africa is facing a growth collapse and that the country is too dependent on tax revenue from rich citizens – who are leaving in droves.<\/p>\n
Eunomix tracks the performance of 190 countries on a range of metrics and forecasts what will happen over the next five years.<\/p>\n
Speaking on Kaya Biz, De Baissac said their forecast for South Africa has been very accurate over the last five years and predicted the decline the country is experiencing.<\/p>\n
South Africa is suffering from high unemployment, slow economic growth, and a flight of skilled, high-net-worth individuals.<\/p>\n
\u201cSouth Africa is facing a growth collapse. It is one of the worst-performing countries in the world across economic indicators, social health, security, and quality of life,\u201d he said.<\/p>\n
The failing state, riddled with corruption and financial mismanagement, places enormous pressure on a small group of individual taxpayers who must carry an undue burden.<\/p>\n
Wealthy and middle-class South Africans are paying taxes for services like education and healthcare, which they do not receive from the state.<\/p>\n
These wealthy South Africans are opting out of the South African economy because it is structurally hollow and on the verge of collapse.<\/p>\n
De Baissac said the exodus includes skilled and wealthy individuals, capital moving to other countries, and providers of goods and services limiting local operations.<\/p>\n
He highlighted that a large part of personal income tax comes from higher-income earners and that working-class taxpayers are disappearing.<\/p>\n
National Treasury\u2019s latest data revealed that South Africa has 7.4 million individuals with taxable income. Of this group, only 1.4 million pay 71% of all income tax.<\/p>\n
Even more concerning is that 133,230 wealthy individuals account for 29% of all personal income tax.<\/p>\n
Compare this small tax base with the 29 million South Africans who receive monthly government grants, and it is easy to see why economists warn it is unsustainable.<\/p>\n
De Baissac added that the tax base is not growing enough for the state to meet its obligations, which is creating a dangerous situation.<\/p>\n
This article was first published by Daily Investor and reproduced with permission. Read the original here<\/a><\/strong>.<\/em><\/p>\n
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