Media release: Predicted TAX FREEDOM DAY 2016 – May 25

26 February 2016
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Central Government Revenues for 2016 are set to be 30.2% of GDP. The General Government Revenue is expected to be 30% more, or 39.3% of GDP.  Tax Freedom Day for 2016 is estimated to occur on May 25 therefore – 5 days later than in 2015.
 

Tax Freedom Day is the day on which average South African income-earners at last start working for themselves. Over one-third of their working year (the 145 days from January 1 to May 25) will be spent working to pay their total taxes for the calendar year, ie, to pay the costs of government.  

There has been a trend toward taking more of the GDP in taxes every year.  Below is a graph of the linear trend of days to Tax Freedom Day by Year from 2002 to 2016.  According to the graph the government is taking more than an extra 1.8 days of national production every year.  Note that government intends to continue this trend in that the rate at which the budget will increase is larger than the expected growth of the economy.

 

 

In 1994 Tax Freedom Day was 12 April – 43 days earlier!  Government takes more than 6 weeks of extra work to pay for its expenditure than it did 22 years ago.  Today government salaries alone consume more of our work than the entire state budget did in 1994.  For every rand taken by government in 1994 R2.62 was kept by the people.  Now the people keep only R1.54 for every Rand government takes. 

Unfortunately in South Africa the taxpayer is not well represented as there are close to four voters for every income tax payer.  Government is larger and more powerful than it needs to be to fulfill its functions. 

The country’s future depends on the economy growing.  Government may do many essential things but production isn’t one of them and the more it takes from the productive sector the slower the economy will grow.  The economy is already stagnant and soon the government may not be able to continue to expand without causing the economy to shrink. It is to be hoped that the current or a future government will begin to consider a smaller less intrusive footprint.

[Calculation by Garth Zietsman, consultant statistician]

 

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