Godongwana shuts down calls to exempt healthcare workers and police from tax

Finance minister Enoch Godongwana has shut down calls to exempt healthcare workers and police officers from personal income tax, saying the law does not allow for such exemptions. 

Godongwana was responding to a written parliamentary question from National Freedom Party (NFP) MP Munzoor Shaik-Emam whether he would consider an exemption from pay-as-you-earn tax for all healthcare workers and police officers up to a certain level. 

Shaik-Emam said police officers were “poorly paid with limited benefits, low danger allowance, live in informal settlements and are at high risk”. 

The minister said the law does not allow for such exemptions in line with the principle that all residents earning an income, be it the president, a worker or a business-person, are subject to tax laws without exception. 

“We recognise the role played by healthcare officials is significant in ensuring provision of efficient and adequate health care to the public, as well in ensuring the provision of health care as a basic human right,” Godongwana said.

“The provision of public healthcare services is a public good that is funded by government and such funds are raised through the levying of taxes. The levying of taxation is a crucial mechanism utilised to generate revenue as part of country’s flagship fiscal policy.”

Godongwana said one of the linchpins of a good tax system was the principle of equity, which incorporates the concept of horizontal equity.

“Horizontal equity ensures all taxpayers who receive employment or other income are taxed the same based on their ability to pay, irrespective of their vocation. Low-income taxpayers earning below R91,250 are also exempt from personal income tax.”

He said the personal income tax system was progressive in nature and therefore the exemption of a group of taxpayers based on their profession would be impractical and go against the principles of a good tax system.

“Marginal tax rates that increase with income and rebates that apply equally to all taxpayers are the main tools to give expression to society’s preference to give relief for lower incomes through the tax system.

“Lastly, it will impede the fiscus, as it will negatively impact the ability to raise sufficient revenue to fund government social programmes.”

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