PwC sees outside chance for super tax

Cape Town - Taxpayers shouldn’t expect any tax relief other than the limited relief for fiscal drag in the form of increased rebates and adjustment of the tables, said tax experts PwC.

This will particularly favour the low-income earners, but high-income earnings may see an increase in their marginal tax rate.

PwC said ahead of Finance Minister Pravin Gordhan’s 2013 Budget Speech on Wednesday that an increase in the maximum marginal rate is a distinct possibility given the pressure on tax revenues, the trend towards higher personal income tax rates in Europe and limited scope for other tax hikes in the South African context.

“We hold the view that there is a 50% chance that the maximum marginal rate could be increased to 42%. It is estimated that such an increase would raise additional tax of R6bn.

“An outside chance exists that a new super tax rate of 45% could be introduced for those earning in excess of R1m, also resulting in additional tax revenues in the region of R6bn.

“A combination of the two would result in additional tax revenues of around R10bn,” PwC said.

On fuel levies, PwC said it expects the general fuel levy to be increased in line with last year (20cents per litre). The Road Accident Fund levy is expected to go up in line with the increases over the last few years by 8c/l to 10c/l.

This will be in addition to a predicted increase of 75c/litre on March 6 as a result of higher crude oil prices and a weak rand.

If the predicted rise materialises, Gauteng motorists will pay a record R13 for a litre of petrol.

On VAT, PwC said although there is arguably scope to increase VAT given the relatively low interest rate and the growing trend to indirect taxes as a source of tax revenue globally, an increase would not be politically acceptable given the perceived regressive effect of the tax.

A 1% increase in the VAT rate would raise about R16n in additional taxes.

On the introduction of a gambling tax, PwC said there have been few developments in this regard and therefore it expected the matter to be delayed.

In the 2012 budget it was announced that a national gambling tax would be introduced from April 1 2013 in the form of a 1% levy on gross gambling revenues, and that it would also apply to the national lottery.