While the global Covid-19 pandemic has stopped international travel, it has not done much to dampen the plans of South Africans who plan to leave the country.
This is according to John Dunn, Citizenship and Immigration director at Sable International, who said that emigration demand has remained relatively constant throughout the pandemic.
He added that while the Covid-19 has put a delay on the plans of some South Africans looking to leave the country, it has not quelled overall demand.
This is because individuals who plan to emigrate have largely been allowed to go throughout the pandemic – except for the months between April and July 2020, he said.
Dunn added that while most of the people planning to emigrate from South Africa are skilled, they are made up of a broad range of demographics.
This includes a gender split of roughly 50/50, with emigration enquiries received from people as young as 17 and as old as 80.
“Skills have always been important for countries like Australia, and are more important now since the skilled worker visa has opened up, and they are potentially looking to reintroduce a version of the old highly-skilled migrant program,” he said.
Dunn said that the most popular reasons given for emigrating include political instability and the risk of expropriation without compensation which could see land taken away from residents.
He added that these factors also have an effect on the exchange rate and investor sentiment, which contribute to the desire to leave the country.
Shrinking tax base
The high number of skilled people emigrating from South Africa has directly contributed to a shrinking tax base – a problem that has been acknowledged by the National Treasury and SARS.
Data published by the University of Cape Town’s Liberty Institute of Strategic Marketing shows that the country’s three upper bands, which comprise the middle class and above, have shrunk considerably over the last three years.
Jean du Toit, Head of tax technical at Tax Consulting SA, said that the reasons for the decline are manifold and that many would attribute it to the brain drain of South Africans leaving the country which has been exacerbated by the lockdown.
He said that there are only a handful of South Africans who actually contribute to the personal income tax pool.
“In terms of the 2020 Budget Review, roughly 90% of the income tax payable by individuals are paid by the middle-class and above (as defined in terms of the survey).
“This puts the result of the survey into perspective; in a three-year period, our personal income tax base appears to have more or less halved and it is likely that a large chunk of that reduction occurred after February 2020.”