Surprising amounts we spend on tax

2014-03-05 00:00

EACH year the finance minister announces further increases to our fuel taxes and so-called “sin” taxes that we pay for our smoking and drinking habits. You may be surprised to discover how much tax you are actually paying on these items.

Total cost of fuel taxes:

Over the next year as motorists we will pay R45,5 billion in general fuel levies.

With the 20 cents extra tax on fuel from April 2, you will be paying R166 in taxes to fill up a 50-litre tank of petrol.

Paying for our sins:

This year our smoking and drinking habits will add R31 billion to the government’s coffers.

With the latest increase in sin taxes you will pay R11,60 in sin taxes every time you buy a box of cigarettes.

For every bottle of sparkling wine purchased the taxman earns an extra R9,11 and whisky drinkers boost the coffers by a massive R44,36 a bottle.

All these figures do not include the R267 billion in VAT that consumers will also pay this year.

The good news:

For those people who do save towards their retirement you will collectively save R24 billion in taxes this year.

A family of four will receive a medical scheme tax credit of R858 per month — doesn’t exactly cover the cost of medical insurance, but it is certainly better than nothing.

If you are about to retire you can now take a R500 000 tax-free lump sum.

This doesn’t mean you should go and spend the money, but by taking the lump sum and investing it outside an annuity you will avoid income tax on the income.

Keep in mind that if you are over the age of 65 you don’t pay tax on income under R110 200, or tax on interest up to R34 800.

Over the next financial year individual taxpayers will pay R355 billion in personal tax.

If you add all our taxes together (personal tax, VAT and other taxes) individuals account for over R700 billion in tax revenue.

To put that in perspective, this tax bill is equivalent to R1 million for each day of the Christian calendar (2014 years).

There are currently 6,4 million active income taxpayers. Around 70% of these taxpayers have incomes below R250 000 a year (R20 000 per month) and pay 36% of our personal taxes.

Only 154 000 people, or 2,4% of taxpayers, earn more than R1 million and account for 30,1% of our personal taxes.

Considering that this segment also accounts for the highest spend on VAT, capital gains tax, dividend tax and estate duty, the state is doing a pretty good job at “taxing the rich”.

The problem is we don’t have enough rich people — or there are some rich people paying no tax.

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