TFSA’s – a better way?
There seems to be quite a bit of activity around the new TFSA accounts and yet it seems to be by all the “wrong” people. By this I mean that the people who seem to be getting excited are not the actual intended beneficiaries…we seem to be forgetting that the TFSA accounts are intended to encourage “non-savers” to save. I’ve thought about it quite a bit and perhaps there is scope for more creativity on this whole thing?
National Treasury seems hell-bent on not being seen to favour the wealthy in the country – why else would they cap the TFSA at R30k pa or put a proposed cap on retirement contributions? They need to rememeber that the wealthy pay the tax in the country and need to be encouraged to invest in SA just as much as anyone else does…
Some of the problems with the TFSA account being aimed at people who are not currently saving is that they are over-indebted, they dont have the funds to save and they are traditionally unreliable when it comes to honouring debit order commitments. These factors all add to the costs of doing business in this sector.
So what about a system where the “wealthy” use their allowance to invest a portion into someone who has not yet been saving’s account? We could to this by having a significantly increased annual allowance – such as R200k but where this can only be attained when the investor allocates an amount (say 5%?) to someone who is currently not saving.
I imagine something like me putting R100k per annum into a TFSA but where 5% of this is then allocated to a “previously disadvantaged saver” such as my domestic worker or her children’s account. I would happily pay this to get the advantage of tax-free growth as well as to try to “redistribute” some of the wealth in SA. For example, when I invest my R100k – R95k of this would go into my account and R5k would go into my domestic worker’s children’s fund (for example). There would obviously need to be conditions put in place to prevent the abuse of the system but with something like this we would all benefit. So how about it, surely we can come up with something that makes it better for all?