Africa Check: Do 1.7 million people pay 80% of SA’s income tax?

The deputy CEO of AfriForum, a non-governmental organisation which seeks to protect “the rights of minorities”, with “a specific focus on the rights of Afrikaners”, outlined a “tragic truth” in a recent tweet.

“In South Africa, about 1.7 million people (roughly 3% of the population) pay about 80% of income tax,” Ernst Roets tweeted. At the time of publishing, the tweet had been retweeted close to 200 times and liked 155 times.

One of our readers asked that we verify the figure.

No source provided

Roets declined to provide Africa Check with his source and asked that we publish his reasons for doing so.

We then approached the South African Revenue Service (SARS), which directed Africa Check to the 2016 tax statistics report, produced annually in conjunction with the national treasury.

The report aims to “present comprehensive tax revenue data in a manner that will complement and help contextualise economic and demographic data provided by other publications”.

The latest version highlights that R389.3 billion in personal income tax was collected by the revenue service in 2015, out of a total of R1.07 trillion tax.

Only reports on 71.9% of personal income tax

The document, however, only reports on 71.9% of the total collected personal income tax (or R239 billion of personal income tax). This tax is called “assessed tax”.

SARS media executive Sandile Memela explained that assessed income tax refers to the tax paid by individuals who submit income tax returns and pay provisional tax.

 

The figure reported in the tax statistics publication does not include all income tax paid to SARS.

Income taxpayers who only pay tax through PAYE deductions and aren’t required to submit tax returns are excluded, the treasury told Africa Check.

‘In principle, the figures are reasonable’

Assessed taxpayers had a total taxable income of R1.3 billion and owed SARS R268.5 million for 2015.

There were 1 821 394 individual taxpayers in the 7 highest income groups (people who earned more than R250 001 per year). These individuals collectively contributed R239 million (89%) of assessed income tax that year.

But, as explained above, this total excludes taxpayers who paid income tax through PAYE but are not required to submit a tax return for assessment.

Deborah Tickle is a tax partner with auditing firm KPMG and a member of the Davis Committee, a body established to “assess South Africa’s tax policy framework”.

She told Africa Check that verifying a claim like this is difficult as “the source and date that the numbers were derived [from] are not provided. However, in principle the figures are reasonable.”

The most recent budget review is for 2017/2018 and shows that just over 1.9 million registered taxpayers are estimated to contribute just over 80% of income tax.

In 2016/2017, just over 1.7 million taxpayers were estimated to have contributed 78% of taxes, closer to Roets’ claim.

While these figures are estimates of expected tax revenue, Professor Matthew Lester, a faculty member at Rhodes Business School noted the process of collecting tax returns for assessment can be lengthy.

Researched by Gopolang Makou

Article supplied by Africa Check. Follow them on Facebook and Twitter for more groundbreaking stories.

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