SOUTH AFRICAN FINANCE MINISTER TO PRESENT MID-TERM BUDGET WEDNESDAY

South African analysts expect Finance Minister Pravin Gordhan to hint on possible changes to the tax law when he presents his medium-term budget policy statement in Parliament on Wednesday.

Experts believe that the conclusion of some of the recommendations of the Davies Tax Committee may result in new or possible tax increases in the New Year, possibly to be confirmed in the annual Budget due in February.

The National Treasury commissioned a few studies several years ago to look at the country’s tax regime. Some, like the Davies Tax Committee have already concluded most of their work.

About a year ago, the Treasury asked for input on a wealth tax although since then there has not been much said on this. Analysts now expect that some of the recommendations made on these studies start finding their way into the minister’s budget speech for implementation.

Director of Tax at Deloitte Alex Gwala said here Monday: “On the wealth taxes, we know that everybody has been talking about it and former Finance Minister Nhlanhla Nene last year invited submissions to tell him what they think of it, but we have not heard anything on that.”

Although the budget statement is not a platform for announcing changes to tax policy, experts will be looking for hints to potential changes.

The Davies Tax Committee concluded its work on base erosion and profit shifting which the Treasury is considering. The committee has also recommended that government still has space to increase the Value Added Tax (VAT).

Gwala added: “One of the things already recommended by the Davies Committee was that there is a room to increase (the VAT rate) but due to the current climate we don’t think it will happen now.”

Earlier this year, the government introduced smaller taxes such as sugar taxes and a tyre levy; however these are not designed to increase the tax revenue.

Experts say the government has limited space to introduce new taxes or increase the existing ones under the current economic environment. Some say the current fiscal constraints will only be addressed by sustained economic growth.

Source: NAM NEWS NETWORK