South Africa’s working girls have made progress in attaining equal pay for equal work, but the monetary scales are tipped towards them by the nation’s tax system that treats men and women equally, but with unequal outcomes.
Applying affirmative motion to tax legal guidelines, to redress the disproportionate impression of Vat and private earnings tax on girls, particularly single moms, would help South Africa’s aim of inclusive financial progress and encourage higher labour pressure participation and entrepreneurship by girls.
South Africa’s tax statistics [i] inform a narrative of gender inequality in girls’s decrease earnings ranges and in discrimination towards single-earner households, which carry a far higher tax legal responsibility than dual-earner households on the similar earnings degree. With the excessive prevalence of households with a feminine breadwinner solely and single moms carrying probably the most child-rearing duty, this locations a disproportionate tax burden on girls.
I’m one of many authors of the 2022 Women’s Report by the SA Board for People Practices (SABPP) in partnership with Stellenbosch Business School.
South Africa’s earlier discriminatory tax system of the apartheid years, which particularly deprived working married girls, was repealed post-1994 and the tax legal guidelines now deal with women and men the identical, regardless of marital standing.
However, equal therapy has not had equal outcomes.
‘Despite the removing of the specific tax discrimination of the previous, the brand new dispensation supposed to deal with all taxpayers equally has had unintended penalties as a result of realities of society as we speak. By disadvantaging single-earner households, the revised tax system with its unisex tax tables has in truth deepened inequality in taxation between women and men.
Consider this instance of the tax legal responsibility of a dual-earning family with two minor youngsters and a mixed earnings of R204 000 per yr versus a single-earner family, additionally with two minor youngsters and incomes the identical quantity.
While each companions within the dual-income family profit from the first tax rebate of R16 425, leading to a complete tax legal responsibility of R3 870 every year, the single-earning family solely advantages from the rebate as soon as and so pays R20 295 in tax, on the identical earnings.
*This graph represents the tax disparity utilizing the 2023 tax yr info
| Tax disparity in households | ||||
| Household composition | Dual-earner family | Single-earner family | ||
| Working husband (earns R9 000 p.m.) | Working single mom (earns R17 000 p.m.) | |||
| Working spouse (earns R8 000 p.m.) | ||||
| Two minor youngsters | Two minor youngsters | |||
| Husband | Wife | Total | Single mom | |
| Taxable earnings | R108 000 | R96 000 | R204 000 | R204 000 |
| Tax at 18% | R19 440 | R17 280 | R36 720 | |
| Less: Primary rebate (< 65yr) | – R16 425 | – R16 425 | – R16 425 | |
| Income tax legal responsibility | R3 015 | R855 | R3 870 | R20 295 |
| Difference: R16 425 | ||||
Given the truth that practically one-fifth of South African households include a single particular person, this tax discrepancy warrants nearer consideration, particularly because it has a big gender bias impression.
More than 40% of South African households are headed by a sole feminine breadwinner, she mentioned, whereas way more youngsters (41.7%) reside with single moms than with single fathers (4.4%), which means that the added tax legal responsibility of single households falls predominantly on girls.
The Sars tax statistics additionally illustrate that the gender pay hole nonetheless persists – whereas girls make up virtually half of taxpayers (46%), a proportion that has been slowly but steadily rising, they pay solely about one-third of complete earnings taxes and are concentrated within the decrease tax brackets.
South Africa’s progressive earnings tax system, the place greater earners are taxed at a better fee, is designed to realize wealth redistribution, but in addition they present that girls’s ranges of taxable earnings are nonetheless a lot decrease than these of males, with girls making up solely 14% of the earners within the highest bracket. This disparity is symptomatic of the nation’s historic gender pay hole and socio-economic inequalities.
I additionally analysed the impression of Vat, the nation’s second-largest tax income stream, and would argue that as a consumption tax it falls disproportionately on girls.
As major caregivers and customarily carrying extra of the duty for collective family wants corresponding to meals, well being and schooling, girls spend a higher share of their already decrease earnings on these wants, and thus carry a higher burden of Vat contributions.
I suggest that authorities take into account increasing the zero-rating of Vat on items and companies that help households, in addition to incorporating parts of affirmative motion in favour of ladies into the earnings tax rules.
These might embrace greater tax thresholds for ladies, tax breaks for female-owned companies, decreased tax charges on property owned by girls, and tax deductions for childcare prices.
Re-introducing the kid tax rebate that was out there pre-1994 ought to be thought-about, she mentioned, as a type of tax reduction for childcare prices. Capping the rebate by earnings degree and means-testing would guarantee equitable therapy, making certain that these in greater tax brackets don’t profit unfairly.
On the federal government expenditure facet, it ought to be famous under-resourced public companies corresponding to well being and schooling usually resulted in girls and women having to tackle unpaid or low-paid care work. Broadening entry to free or inexpensive healthcare, schooling, water and social safety, or by means of social funds (grants) for care work, would liberate extra girls to earn an honest earnings.
Fiscal coverage can, and will, be used to redress gender inequities and help the nation’s broader transformation agenda.
Women’s Report editor Prof Anita Bosch, the analysis chair for Women at Work at Stellenbosch Business School, mentioned the 2022 report analyses South Africa’s fiscal insurance policies by the lens of gender fairness. Although women and men are handled the identical “on paper” concerning taxation, retirement funds and social grants, the insurance policies in apply create life-long monetary inequality for ladies.
Bosch mentioned the report offers a deeper understanding of “the myriad balls that women have to juggle, trying to progress while also providing”.
“This edition of the Women’s Report shows that greater consideration of the facts of life in South Africa that hamper women’s advancement is needed in fiscal policy-making. Such an approach, covering tax, social grants, retirement funding and gender-based budgeting, should aim to halt the downward spiral of odds that progressively stack up against women as they navigate life.”
“Without such informed and dedicated action and targeted fairness, addressing the plight of the poorest of the poor and eradicating the cycle of poverty for the current generation of children, will remain merely a noble aspiration,” she mentioned.
Download the 2022 Women’s Report here
Dr Lee-Ann Steenkamp is head of the Postgraduate Diploma in Financial Planning at Stellenbosch Business School.
