select
|

Heavy tax burden is squashing home dreams

Individuals in SA are paying way too much tax - and it is time to ease that load or the economy, and the housing market, will continue to exhibit only sluggish growth.
 
“At the moment, personal income tax and VAT (which is mostly paid by individuals) account for more than 50% of SA’s total tax revenue,” notes Berry Everitt, MD of the Chas Everitt International property group.
 
“And that does not take into account all the other taxes that individuals pay regularly, such as fuel tax (about 28% of every litre purchased), municipal taxes and toll road fees, or big amounts that they pay less regularly, such as capital gains tax, estate duty or property transfer duty. These take their contribution to total tax revenue to around 60%, which in anyone’s terms means that they are carrying a very heavy tax burden.
 
“Then if you add this to the continually rising fuel and energy costs that affect every household, it is little wonder that SA has such a low savings rate – which in the property context translates directly into the inability to save for a deposit and to qualify for a home loan.”
 
What is needed, he says, is a major reduction in personal tax rates. “This would increase each household’s disposable income and result, in turn, in higher taxable incomes and profits for companies. It would also, most importantly, facilitate the creation of new jobs.
 
“It is well known that the easiest person to collect tax from is a person with a job, but the problem at the moment is that SA only has a tax base of around 5m people out of a total population of around 50m, and that they are becoming increasingly resistant to what they see as the unfairness of the system.
 
“So what government needs to do is take the plunge and lower taxes to create more jobs, so that the tax load can ultimately be spread more fairly among a greater number of individuals.”
 
Meanwhile on the property front, Everitt says, transfer duty needs to be looked at once again. “The current threshold at which transfer duty becomes payable is R500 000, but this is too low in the light of the average house price now being well over R700 000 – and in the light of the fact that most potential buyers now also need a large cash sum as a deposit in order to secure mortgage finance.
“Most people cannot afford both and home ownership is taking a back seat as a result. I would suggest that the threshold should now be raised to R750 000, or even R1m.”
 
ISSUED BY CHAS EVERITT INTERNATIONAL


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK