Increases in airport tax 'disappointing'

Johannesburg - Higher airport departure taxes announced in Finance Minister Pravin Gordhan's 2011 budget on Wednesday are "disappointing", the Grant Thornton auditing firm said on Wednesday.

Christelle Grohmann, director at Grant Thornton Advisory Services, said the hike from R150 to R190 per passenger per international flight and up R20 for domestic flights would hinder South Africa's efforts to be a competitive destination for tourists.

"Given that job growth for tourism is dependent on international tourism growth and not necessarily domestic growth, and with South Africa recording such good growth in both African and overseas visitors in the past 12 months, to continue with this momentum we believe that airfare prices need to be kept competitive," she said.

"Although not substantial, combined with all other increases in costs it is significant."

The increases will come into effect from October 1.

Grohmann welcomed the news that Treasury was examining various sources to fund the national health insurance (NHI).

"It is encouraging to see that Treasury is looking at various sources to fund the NHI which include a payroll tax payable by employers, an increase in the VAT rate and a surcharge on individuals' taxable income," she said.

"But one has to wonder if the increase in VAT will fall away (or remain as the only option available) as an option after the election year."

Leonard Brehm, national chairperson of Grant Thornton SA, said he was "glad" Gordhan had addressed the issue of a lack of a skilled workforce and "red tape".

In its own research, the firm concluded that a skilled workforce and red tape in the country were the biggest constraint to business.

"I am glad to see that the minister addressed both these issues in his budget speech today, by setting aside R189.5bn to education," Brehm said.