Tax burden to increase

Johannesburg - South Africa will not escape the global trend of increasing taxation.

Economic conditions and pressure on the state coffers necessitate higher taxes.

The main driver for higher taxation is the budget deficit, which rose to R128.6bn in October.

In addition, tax revenue from individuals and companies declined to R20.2bn - R4.7bn less than that in October last year.

South Africa is not alone in facing this dilemma.

Budget deficits are rising globally and in developed countries budget deficits now exceed 10% of their gross domestic product.

Governments' bail-out strategies in extending rescue packages to struggling economies during the financial crisis make higher taxation inevitable, says Karl Leinberger, head of investments at Coronation.

The general expectation is that South Africa's higher income groups will be affected the most by rising taxation.

Stanlib economist Kevin Lings does not expect huge tax hikes in 2010, but reckons that they could certainly increase dramatically over the next couple of years.

He expects tax thresholds to be adjusted in 2010, but not for the marginal tax rate to be pushed up.

Sanlam Investment Management economist Arthur Kamp regards as likely the introduction of number of new taxes - something last seen some time ago.

He expects new taxation on reducing damage to the environment - such as levies on carbon emissions and an increase in airport taxes.

The economists believe that company tax will remain unchanged and that government will not tamper with VAT.

- Sake24.com

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