Could budget 2017 bring transitional tax?

Cape Town - Given that South Africa as a country is still struggling financially and the earnings gap between the poorest and the wealthy does not seem to be shrinking, we can be confident that more innovative taxes will be  included in the 2017 budget, according to Cathie Webb, chief operations officer of Accsys.

READ: Who will feel tax pain in Gordhan's Budget 2017?

"Considering that in 2016 the average consumer price index (CPI) was rated at approximately 6%, and that not many of us received increases amounting to 6%, while medical aid rates increased on average 10% or more in January this year, most of us are worse off than we were this time last year," explained Webb.

And in her view, it is unlikely to get better.

In the mini budget of October 2016, R13bn additional taxes were announced on top of the R15bn increase previously announced for the 2017/2018 tax year.

Webb suggests what could be expected from the 201 budget:
 
Transitional levy tax

For those of us who can remember, in 1994 we paid an additional tax for one year. It is possible that another such tax will be imposed, to assist government in balancing the books.

Sugar tax

This has been under discussion for some time, under the guise of ensuring that South Africans lose weight. It seems probable that this will be mentioned in the budget speech, and is likely to come into force in the near future.

Value-added tax (VAT)

South Africa pays less than the average African VAT of 15.25%. An increase in our VAT rate is possible.

Sin taxes

Tax on “sinful” luxuries such as alcohol and cigarettes could increase again, as they do each year, by more than inflation.

"Furthermore, the proposed National Health Insurance is also still being discussed, and alternatives for funding being explored. However, it is doubtful that this will come to pass in the next tax year," said Webb.

"In addition, we might once again hear that government will 'moderate spending' and it would be helpful to all of us to see this in action, while we are tightening our belts still further."

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