Acommon remark at dinner parties, when the subject of tax comes up, is to say: "Well, who knows how much we pay in total taxes once you add VAT and all the rest of it!"
So here's an attempt to show how much tax, both direct in the form of tax on salaries, and indirect in the form of VAT and excise duties, an average couple with two children on a modest monthly budget might pay. The figures have been checked by tax experts from two professional firms.
The first finding is that it is practically impossible to calculate how much tax an average household pays because there are numerous once-off and hidden taxes that vary enormously from one household to another. A calculation of basic monthly expenditure alone for a middle class household gives an extremely low figure for total taxes, even taking PAYE and SITE, VAT and customs and excise into account.
Starting with the monthly budget, the Smiths have got off lightly.
Firstly, the fact that Mr Smith earns R5 000 and Mrs Smith R3 500 means that neither are in the top tax bracket. But if one of them earned R8 500 and the other did not work, their household would fall into the top tax bracket, where income earned over R80,000 a year is taxed at 44 percent.
Secondly, the largest single item of expenditure is the bond repayment, and that incurs no taxes. Another relatively substantial figure is school fees, which are also VAT exempt (though one tax expert argues that the fees in themselves are a tax because in many other countries government schools are free). For this couple, the tax and excise duty on petrol, which is about 35 percent on every litre, is the heaviest monthly penalty.
Thirdly, this budget doesn't itemise any once-off purchase of luxury goods such as TV sets, refrigerators, hi-fis, and computer software, on which VAT and customs and excise duty - between 20 and 90 percent - is levied. A couple on a tight budget would make such purchases far less frequently than those with a greater proportion of discretionary income.
As a result, the higher income households are not only paying more income tax, but considerably more VAT and excise duty. However, the more discretionary income a household has, the harder it becomes to draw up a typical budget for it.
Another large but occasional tax is the VAT, transfer duty and stamp duty you pay when you buy a house. It's a difficult item to put into an "average" budget because some people live in the same house for decades and others move every two or three years.
Annual licence fees should also be taken into account, covering everything from the TV set to the dog. Toll fees are another hidden tax, and vary according to the amount of travelling you do and what routes you use. If you go on holiday each year and stay in hotels there are even bed and rating levies!
Of course there's no such thing as an average household and, even taking a modest income into account, I may have over- or under-stated what would be paid in food, and rates on your property.
One tax expert said his firm tried to do this exercise around the time of the Budget and abandoned the attempt because of all the hidden extras. If you wanted to do this exercise yourself it would probably be quite instructive, but extremely time-consuming.
Two final points. Does 23 percent tell you anything, apart from the fact that the Smiths are donating about a quarter of their working life to the government? It would only be useful if exactly the same exercise could be done to compare South African taxpayers with another country.
Even more relevant is how do you benefit from the tax you pay? Paying 23 percent for no visible return is worse than paying 40 percent for good policing, clean streets, the ability to draw the dole when unemployed and an old age pension.
The table below illustrates how much direct and indirect tax Mr and Mrs Smith would pay. They have two children at a government school; and a bond of about R115 000 with a monthly repayment of R2000 a month. The rateable land value of the property is R50 000. They run one second-hand car, (paid off) which he drives to work - she uses the bus.