Johannesburg - Finance Minister Pravin Gordhan must beware,
in his upcoming budget, of destroying the South African culture of paying
taxes, the SA Institute of Professional Accountants (Saipa) said on Wednesday.
"We have successfully created a culture of tax-paying in
this country, but it would not take a lot to destroy it at this stage,"
spokesperson Ettiene Retief said.
"Government's growing reliance on individual taxpayers
to fund the fiscus means that it is increasingly dependent on convincing
individual taxpayers that their money is being well managed and sensibly
spent."
He said wasteful and fruitless expenditure was widely
covered in the media and this made it difficult for the government to argue it
needed to collect more taxes from already overburdened taxpayers.
Gordhan will present his budget to parliament on February
22.
Retief said individual taxpayers had been contributing an
ever-growing share of South Africa's tax revenues in the past few years.
"It's an approach that makes sense as this tax is easy
to collect from employers and is fairly resistant to economic cycles, unlike
corporate tax which depends on profits.
"The end result is that individual taxpayers now have
precious little space to manoeuvre when it comes to structuring their salary
packages."
Retief said tax rates were a highly political act as the
money collected was directly channelled into implementing the ruling party's
programmes.
"When a government loses its moral right to levy taxes,
individuals can be surprisingly successful at circumventing them," he
said.
He gave as an example Italy, where about a quarter of
economic activity takes place outside the tax net.
"(S)uccessful tax and foreign exchange evasion was a
hallmark of this country as the apartheid government lost legitimacy," he
said.
In the light of this, and given that 2012 would be an important
year politically, tax rates would probably not change that much.
"I expect individual tax rates to change only
marginally, mostly to bring some relief from 'bracket creep' to the lower
income earners," said Retief.
There was little room to raise VAT, as the current rate of
14% was just under that of international benchmarks, he said.
"The minister's hand might be forced if the decline in
VAT collections during the current tax year had not been reversed.
"However, VAT is ultimately a tax on consumers so, at
the least, any increase should be matched by a revision of the list of exempted
items."
He did not expect the minister to raise corporate taxes.
"During 2012, the secondary tax on companies will be
replaced by a tax on dividends, effectively reducing corporate tax rates and so
further promoting South Africa as an attractive investment destination and the
obvious springboard into Africa.
"Raising corporate tax rates would thus be
counterproductive and would anyway not raise significant extra sums, given the
state of the economy," said Retief.