Taking hold of your tax

South Africans receive little in return for the taxes they pay. What can be done to remedy this unsatisfactory state of affairs?

Taking hold of your tax
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Most South Africans feel that they receive very little benefit in exchange for the taxes they pay. They cannot rely on the state to provide a high standard of safety, education, transport, communication or medical care, they say. So, in addition to paying for services owed to them by right, the average South African pays private institutions to provide these services.

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It is claimed that the taxpayer’s money is abused and used to fund the extravagant lifestyles of many of the country’s leaders.
Whether true or not, no one has the right to appropriate the fruits of the labour of others; there is no possible excuse for this behaviour. It is a universal truth that the person who labours is rewarded for it. In civilised systems, the fruits of one’s labour is protected by law.

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Do not despair – you have control
The good news is that not all transactions attract tax. It’s only when the taxpayer sells or barters goods that any question of tax arises. Hypothetically, if a person lived in a temperate climate and had a little fertile land, as well as access to adequate water, that person might be able to provide for many of his needs in terms of food, medicinal herbs and even fuel.

A self-sufficient person has the ability to store excess produce, and if he does not sell that surplus but instead provide for his dependants (or extended family), he would pay no tax on his produce.This hypothetical case is far-fetched, but the principle holds true. A more likely scenario is that of one who chooses to be as self-sufficient as possible. If all the non-tax deductible expenses, such as private education, medical fees and travel and housing expenses are kept to a minimum, the income needed to generate the after-tax revenues required to fund a low-key lifestyle is reduced.

Make sure you know the facts
Many people are not open to opinions contrary to their own, and this feeds into the tax gatherer’s hands. Take, for instance, a car, which is generally not tax deductible if it is a private vehicle. In New Zealand recently, researchers performed a road test comparing a highly fuel-efficient, technologically advanced car and an old Morris Minor. The latter, in good condition, cost a fraction of the new car (and it had personality). No surprises here.

What is remarkable, however, is that the fuel consumption figures returned by the Morris Minor were within the same range as the modern hybrid car specifically manufactured to be highly fuel-efficient! So if you’re tempted to buy an expensive new car to save petrol, think again. Do your homework and don’t be taken in by salespeople and end up spending money unnecessarily.

More luxuries mean more money for SARS and less for you. Concentrate, rather, on becoming bond-free so that the two most fearsome creditors, the banks and the taxman, become less of a threat to you.