David Lipschitz, Milnerton
VAT and ad valorem duty are two taxes that hurt the poor the most.
Many rich people don’t pay VAT for all sorts of reasons, or they pay VAT on fewer things than poor people. Increasing VAT hurts the economy. Millions of hours will need to be spent checking computer systems to ensure they work. Then there is the problem of a purchase in March with VAT at 14% and a refund in April with VAT at 15%.
VAT will raise approximately R36 billion, assuming that it doesn’t hurt the economy further and actually decrease our growth. Ad valorem duty on smartphones is ridiculous, and it should be scrapped entirely.
Smartphones give the poor access to the world’s library and the ability to make phone and video calls to anyone anywhere, and to be able to apply for jobs, and get free education. There are a bunch of other benefits that smartphones provide.
All these have been paid for by the rich, and given to the poor for free. Thirty years ago, not even the rich had access to this kind of information and communication connectivity.
Scrapping ad valorem duty and VAT on smartphones will increase productivity of poor people allowing them to learn and compete with rich people. For a decade, our government has been intent on strangling the economy, which plays into the hands of our trading partners, keeping our minerals and raw materials cheap, whilst ensuring that they play a very big part in our economy.
It would be so much better and easier to grow the economy. In order to do this, we need cheap and abundant electricity and water, and in a modern economy, these are easy to do. And growing the economy by 2.7% would also add R36 billion to the government’s income.
Lastly, rich people have paid for poor people to have free electricity and water, subsidised food, subsidised transport, grants for all sorts of things like having children, free medicine and hospital and health care, free connectivity to the whole world’s library with all its information at their fingertips, free connectivity with their friends, neighbours and potential clients, and so much more that is free or almost free.
This has to be paid by someone. And this someone is a rich person or a taxpayer.