Lindani Gumede writes on News24 that we should scrap the current PAYE (Pay as you earn) tax system for a Pay as you can tax system. Where people pay more or less tax based on their circumstances instead of the size of their salary. So if you have fewer basic services, like people living in rural areas vs people living in cities, you pay less. If you can prove that you're doing enough for your kids not to be a burden on the state later, you pay less tax now.
This is a brilliant idea, but will still only affect the people who are currently paying tax.
The whole idea behind tax, in my opinion, is that everyone contributes fairly to the greater good of the country. In our country, more than 60% of the population do not pay tax at all, nice for some, not so nice for the ones who have to carry these poeple people (finger trouble, or freudian slip, you decide) (for readers from other countries, poepol is an afrikaans word for asshole).
Back to my topic…
In my view, the only way to get everyone to pay tax in a fair way, is to scrap personal income tax completely, business tax should stay.
HANG ON!!! I hear you say, how do we support our country if personal tax is scrapped completely, surely we can't put business tax up.
No, my idea is not to increase business tax. My idea is to increase VAT (sales tax) to 20%, and make sure that VAT is charged on everything, except a few basics.
How would this be better?
Think about it this way, the more you earn, the more you spend…in most cases this holds true, because everyone want to improve their lifestyle as and when their income improves.
By increasing VAT to 20%, prices for everything does not go up that much, plus there will be a lot more spendable cash in everyone's pockets. You also get to cut down on processing at the revenue services, because you don't have amateurs submitting returns, this load is on business, and the load does not change, because most businesses already file VAT returns.
And there you go, a fair tax system, with everyone contributing.