Expert: Wealth tax not off the agenda

2011-10-25 22:15 - I-Net Bridge
Johannesburg - With government debt on the rise, the primary funding mechanism will always be tax revenue and so increases in tax rates could still be on the cards for 2012, according to AJ Jansen van Nieuwenhuizen, director and head of Tax, Grant Thornton Advisory Services.

Although there had been widespread speculation on possible increases in the top marginal tax rate for individuals, as well as the funding mechanisms for the proposed National Health Insurance (NHI), there was no specific mention of such increases in the medium-term budget policy statement on Tuesday.

"It is encouraging that the focus of the speech was on the expenditure side, rather than on the increase in revenue," said Jansen van Nieuwenhuizen.

"The Minister of Finance, as in previous speeches, has again highlighted the issue of wasteful expenditure in government. He has indicated that he will task the Auditor General to focus on the reporting of savings by the various governmental departments. Reporting is one thing, but the focus should shift to the heads of these departments being taken to task, and where appropriate, to removing them from office."

Jansen van Nieuwenhuizen also believes the mention of simplifying procedures and reducing costs relating to cross-border money remittances, particularly to neighbouring countries and the rest of Africa, will provide a much needed boost to SA truly becoming a gateway to Africa.

But of concern is the mention that in the longer term, a rising floor of social and economic rights must be realised.

"This was not expanded on, but there should be concern that there will be further increases in the number and extent of social grants. The reference to economic rights was also not expanded on, but could this be a veiled reference to nationalisation?"

Reported tax revenue projections of R729bn are R13bn behind the February budget estimate, with higher than expected collections from Customs duties and Import VAT compensating for lower VAT receipts and lagging corporate tax collections.

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