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Tax Explained


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Suppose that every evening, 10 men go out for beer and the bill for all ten

comes to R100. If they paid their bill the way we pay our taxes, it would go

something like this:


The first four men (the poorest) would pay nothing.

The fifth would pay R1.

The sixth would pay R3.

The seventh would pay R7.

The eighth would pay R12.

The ninth would pay R18.

The tenth man (the richest) would pay R59.


So, that's what they decided to do....... The 10 men drank in the bar every

evening and were quite happy with the arrangement, until one day, the owner

said, "Since you are all such good customers, I'm going to reduce the cost

of your daily beer by R20".


Drinks for the 10 men would now cost just R80.

The group still wanted to pay their bill the way we pay our taxes. So the

first four men were unaffected. They would still drink for free. But what

about the other six men, the paying customers - how could they divide the

R20 windfall so that everyone would get his fair share? They realised that

R20 divided by six is R3.33. But if they subtracted that from everybody's

share, then the fifth man and the sixth man would each end up being paid to

drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill

by a higher percentage the poorer he was, to follow the principle of the tax

system they had been using, and he proceeded to work out the amounts he

suggested that each should now pay.


Therefore, the fifth man, like the first four, now paid nothing.

The sixth now paid R2 instead of R3 (33% saving).

The seventh now paid R5 instead of R7 (28% saving).

The eighth now paid R9 instead of R12 (25% saving).

The ninth now paid R14 instead of R18 (22% saving).

The tenth now paid R49 instead of R59 (16% saving).


Each of the six was better off than before. And the first four continued to

drink for free. But, once outside the bar, the men began to compare their



"I only got a rand out of the R20 saving," declared the sixth man. He

pointed to the tenth man, "but he got R10!"


"Yeah, that's right," exclaimed the fifth man. "I only saved a rand too.

It's unfair - he got 10 times more benefit than me!"


"That's true!" shouted the seventh man. "Why should he get R10 back, when I

got only R2? The wealthy always win!"


"Wait a minute," yelled the first four men in unison, "we didn't get

anything at all. This new tax system exploits the poor!"


The nine men surrounded the tenth and beat him up.


The next night the tenth man didn't show up for drinks, so the nine sat down

and had their beers without him. But when it came time to pay the bill, they

discovered something important. They didn't have enough money between all of

them for even half of the bill!


And that, boys and girls, journalists, labour unions and government

ministers, is how our tax system works. The people who pay the highest taxes

will naturally get the most benefit from a tax reduction. Tax them too much,

attack them for being wealthy, and they just may not show up anymore. In

fact, they might start drinking overseas, where the atmosphere is somewhat




For those who understand, no explanation is needed.


For those who do not understand, no explanation is possible.

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Unfortunately, I think this would be lost on most of the population. In fact, you would probably start a riot when they hear somebody has been getting free beer and they were not allowed to partake...

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Unfortunately, I think this would be lost on most of the population. In fact, you would probably start a riot when they hear somebody has been getting free beer and they were not allowed to partake...


:lol: :lol: :lol: :lol: :lol: :lol:

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Using some SA income tax statistics I'll rewrite the story a bit:


Ten working people go out for a beer and split their R100 bill according to the SA tax system.


The first two, earning less than R47k/year, pay nothing.

The third, fourth, fifth and sixth, who manage to earn up to R60k/year, scrape together R1.50 between them.

The seventh, eighth and ninth, earn less than R120k/year and each contribute R15.50.

The tenth earns more than R120k/year and pays the remaining R52.


The ten now decide to host a party for all their unemployed, underaged and pensioned friends and relations. Forty extra people show up. The 50 people at the party go through R1000 of snacks and booze. The workers realise they're going to need to sponsors for this big amount so they decide to fund their party on the lines of SA's total tax revenue.


The 10 decide that they'll pay R310 between them (personal), split as per their usual tab.

They go to their bosses (companies) who agree to donate R265.

Basics like chips and cooldrinks will be free, but if guests want more fancy fair, they have to pay. This cash bar (VAT) brings in R225.

They find an import/export business (customs) and a petrol station (fuel levy) willing to donate R110.

Finally, they find R90 scatterd down the backs of various sofas (other).

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