Global Courant
Finance Minister Enoch Godongwana has heeded a call to exempt health workers and police officers from income tax. He said the already progressive tax system allows for an acceptable level of exemption and anything based on appeal would be impractical.
In a parliamentary Q&A that took place in late May 2023, a member of the National Freedom Party (NFP), Shaik Emam, called on the Finance Minister to consider exemptions for health workers and police officers up to a certain level.
Emam suggested that given that police officers in the republic are poorly paid with limited benefits, low hazard pay, live in informal settlements and are at high risk, Godongwana should consider exempting police officers from paying income tax.
The same sentiment was aimed at healthcare workers, and he suggested that Godongwana consider a pay-as-you-earn tax (PAYE) exemption for all healthcare workers up to a certain level.
In response to these requests, Godongwana simply said no.
“The law does not allow such exemptions, in accordance with the principle that all residents who earn an income, whether the president, an employee or a businessman, are subject to our tax laws without exception,” he said.
Godongwana said he recognizes that the role played by health officials is important in ensuring the provision of efficient and adequate health care to the public and safeguarding the provision of health care as a fundamental human right.
He mentioned a similar respect for police officers. He said he also recognized that the role of the police plays an important role in ensuring public order and providing safety and security to citizens as a basic human right.
However, Godongwana noted, “the government funds the provision of such safety and security as a public good, and such funds are raised through the collection of taxes”.
He explained that taxation is a crucial mechanism used to generate revenue as part of the country’s main fiscal policies, adding that “one of the cornerstones of a good tax system is the principle of fairness, incorporating the concept of horizontal fairness”.
Horizontal fairness ensures that all taxpayers who receive employment or other income are taxed in the same way according to their ability to pay, regardless of their occupation. Low-income taxpayers earning less than R91,250 are also exempt from income tax, Godongwana said.
Because South Africa’s personal income tax system is progressive in nature, he noted that exempting a group of taxpayers based on their profession would be impractical and contrary to the principles of a good tax system.
Godongwana argued that marginal tax rates that increase with income and rebates that apply equally to all taxpayers are key tools for expressing society’s preference to alleviate lower incomes through the tax system.
He added that it would also hinder the tax authorities, negatively impacting the ability to generate enough revenue to fund government social programs.
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