Proposed Tax on New Graduates

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One of the resolutions passed at Mangaung last year was a proposal to tax new graduates. The purpose of the tax is to bolster NSFAS. While I agree on the need for NSFAS, it should not come at the expense of new graduates. Tertiary education should be incentivized and not the other way around.

As this was taken at the ANC conference, it is not yet on the government agenda. On the face it seems that the ANC is seeing the effects of a slowing economy, the impact has on revenue collection, and are looking at creative ways in which to levy taxes. This can be seen with the introduction of e-tolling and the government’s insistence on “the user pays principle”

This principle in my opinion is flawed when it comes to national budgets on infrastructure, service delivery, national healthcare, education, safety and security as these impacts the vast majority of the population. As an example if the user-pays principle was to be uniformly adopted across government spending and revenue collection, as someone that does not have children and have private medical aid, I would be within my rights to request that my tax paid not go towards education or public health. Also my tax should only be spent in the Western Cape. Where does one then draw the line with this flawed user-pays principle.

Last year Pravin Gordhan announced South Africa’s first 1 Trillion Rand budget. I shudder to think what he will be saying when he steps up in parliament later this month. Last year’s budget was probably one of the worst in recent years. The reduction of certain taxes was far less than the implementation of new taxes and the increases in existing ones. Last year’s budget was one that affected the poor more than any other sector of the population.

While the proposed graduate tax will only be a possible reality in 5 to 10 years, something needs to done now to stop this from ever seeing the light of day. It should not even get as far as the etolling debacle as the action through the courts will be a lot harder than any civilian lobbying action taken now.

The full article can be viewed HERE.

Written by: Achmat Kazie, TSiBA’s Financial Manager

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