I'm interested to know what has been the tax effect in erroding wealth.
We seem to be taxed left right and centre these days. From personal income tax eroding how much you earn, to VAT increasing how much you spend. Not to mention transfer tax, capital gains, sin tax, etc. Was this the same in our parent's generation? Has it been adding to the fact that most people in our generation, earning a good salary, can't afford houses?
04 June 2011
Saturday Open Thread: Taxes
Reader WJ asks:
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8 comments:
My biggest problem with Capital Gains Tax is that it does not take into consideration inflation, and secondly, that it demotes upkeep.
On inflation: I build a R2,5M house, and in normal times, at REAL inflation (not the odd basket quoted), prices go up from year to year. In 10 years time, to build that same house again, would cost a lot more. If I then sell the house, this is not taken into account with Capital Gains Tax. To make matters worse, if the Government really screws up, and inflation rockets (as it did in Zim), they will actually make a lot more money from CGT! Wow, what an incentive to keep inflation high.
On upkeep: I build the same house as in the example above, and my neighbour builds one at the same price. In the next 10 years, my neighbour does not look after his house, spends all his money on new cars and overseas trips, and basically neglects his property. I prefer to keep mine in good condition, and even upgrade it extensively. After 10 years, my house is valued substantially higher than his, so I have to pay a lot more CGT. I'd say this is promoting the wrong lookout!
Formulating Inflation into the calculation of CGT and permitting Net metering with Eskom (reverse metering).
Now those would be economic injustices for Helen Zille to push for.
DA are you reading this ?
Wake up and smell the coffee, this is just another tax to milk the people who are saving and trying to make a living. The super rich will not pay any tax (or very little) in any event, and the poor can not afford any tax. The middle class (avergage joe) is getting poorer by the day. I am busy planning my emigration out of here
Hope you are not emigrating to the UK. Taxes are way higher there than it is here.
http://www.adamsmith.org/blog/tax-and-economy/tax-freedom-day-2011/
Taxes may be higher here in the UK, but you probably get better value for your money.
For example, you can actually use the National Health Service and don't need private medical aid. You can actually send your children to the state schools and don't have to pay extra school fees. The police do their job so you don't have to pay high rates of insurance on everything. And of course you pay VAT on all these services in SA.
Not that I'm saying the UK tax is reasonable, there are plenty of things I pay for that I don't think I should. But it's not as simple as saying taxes in country X > taxes in country Y.
I really am beginning to understand the cash shopkeeper mentality of not declaring all cash income.
When you can't see your taxes working for you, you can always keep your cash under the floorboards.
The only tax you will then be paying is inflation tax, which we all end up paying in any case.
Anonymous said...
Hope you are not emigrating to the UK. Taxes are way higher there than it is here.
Yes, and it's become near impossible to emigrate to the UK unless you hold a couple degrees, are young and earn a good salary.
Anon with the cash under the floorboards.
Why pay the inflation tax when you can buy a krugerrand and get 18% appreciation per year? Whats more it doesnt burn or melt if your house goes up in flames and takes up a lot less space than 10k cash.
Thats what gold is meant for; as a store of value. Paper is a means to easily exchange value, not for saving.
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