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How to spend the Capital of the Nation

15 January 2013, 07:18

Those who have read my other articles on income tax will be aware that I have been advocating the elimination of income tax with associated job and growth benefits - at the expense of BIG government. The total income tax collected per year is roughly R250 billion. This excludes the hidden "taxes" such as UIF, Skills development levies, Human Resource Development etc which companies pay, but aren't reflected as part of "income" per-se.

One of the things I have been mulling over though is that if we do allow income tax, what should it be spent on ?

One thing I noticed is that without infrastructure our ability to work in impaired. We need new infrastructure on a regular basis.

It seems to me that the Capital of the nation is in fact income tax - it is the money which we should use to fund once-off improvement projects which will increase the nations productivity.

For example the Eskom build programme would be funded entirely from income tax without any annual power cost increases etc. The total budget for the Eskom upgrades is R340 billion spent between 2005 and 2018. In other words a whopping R26 billion a year on average or 10% of the income tax we pay.

Instead Eskom is upping its rates at 25% per annum and borrowing large amounts of money from the outside world and the people who are paying are the self-same income tax payers.

A second example is the R20 billion which the road upgrades around JHB cost (8% of one year of income tax). Somehow we can't "afford" to take this from the taxes already paid and need a new tax to pay for this (e-tolls).

Basically, our income tax of R250 billion a year easily pays for these "massive" infrastructure build programmes. We could even build a major subway system in JHB, CT and anywhere else that needs one. Imagine JHB running like a New York with the need for private transport substantially reduced. Imagine the impact on the poor of not having to own, maintain and pay for a car OR pay a taxi driver to get them to work every morning.

The current rail system in SA for example could easily be upgraded using this money - but we are again faced with a "massive" bill to pay for it.

Governments R4 trillion infrastructure plan rolled out in 2012 is planned to be spent over 15 years. It could all be paid for from income tax.

So the question is why isn't it ? Why are we being asked to pay ridiculous 25% per annum increases on power, e-tolls and who knows what else will arrive ? The reality is that government is spending all the money on .... government.

Government has grown itself to the point where the biggest expense government has is government. As an example we spend R206 billion a year on education. An average of R720 000 per classroom of 35. Teachers get roughly R200 000 of that per year, and lets say textbooks and school maintenance, admin etc cost a generous R200 000 per year additional PER classroom. This still leaves R320 000 PER CLASSROOM per year for what ???? (33% pass levels, lowest common denominator marking and hefty salaries for those who "administrate" the system is what we get).

We as income tax payers need to require that government cut its costs and allocate income tax not to "more government jobs" but to growing our infrastructure. The irony is that the poor have the most to gain from this - what is the point in a "youth dole", "unemployment grant", "old age grant" if the moment you try to spend it you find that power is going up at 25% per annum, food, fuel etc. at +10% - all because government spends too much on being government.

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