Mixed reaction to proposed 12% tax deduction from citizens' income
The
Department of Social Development has gazetted its Green Paper on Comprehensive
Social Security and Retirement Reform, which proposes the creation of a new
National Social Security Fund.
This will be a government-managed fund, which will provide retirement, disability, benefits and unemployment benefits.
However, according to the Green Paper all citizens will be required to deposit 12% of their income into the fund.
Economist Dawie Roodt says before getting upset at the suggestion, we should understand that this is only just a ‘green paper’
“I think it is important to first acknowledge that this a green paper and not white paper. A white paper acts as a suggestion and action that should be taken. Whereas green paper is more of just a discussion document. I think a lot of time will pass before this becomes a reality,” says Roodt.
Economist, Dr Azar Jammine says the fund is great on paper but the practicality of it is questionable.
“In theory, this is a great idea, because people need to have that social safety net, But practice - taking another 12% over and above a high tax rate already, of those who are in a position pay taxes, will leave them with very little left. To spend on anything left,” he says.
LISTEN TO DR JAMMINE BELOW:
According to the proposal, the 12% that would be given to this fund equates to a maximum of R2 760 per month.
Afriforum says it seems as if government is trying to encourage citizens to launch a tax revolt.
“It’s far-fetched and a sign that the ANC (African National Congress) is simply not able to establish sustainable economic growth and that has reached bankruptcy when it comes to ideas on creating jobs,” said Afriforum in a statement.
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