New card taxes for South Africa

New card taxes for South Africa.. Finance Minister Enoch Godongwana is expected to clarify South Africa’s fiscal position in his first Medium-Term Fiscal Policy Statement (MTBPS) on Thursday, November 11, including the possibility of new taxes.

New card taxes for South Africa
New card taxes for South Africa—–

 

While it is unlikely that Godongwana will go into details of the new taxes, the MTBPS is expected to indicate whether we will see any new taxes arriving in February 2022, said Nazrien Kader, Head of Tax at Old Mutual Group,

“Minister Godongwana has previously indicated that he was not in favor of raising taxes to finance spending. It was recorded at a recent political meeting of the ANC where he expressed the opinion that South Africa cannot come out of the economic crisis with taxes and pointed out that the recent tax increases n ‘have not generated substantial additional income,’ she said.

“It has also been widely reported that there has been an accelerated exodus of the so-called wealthy out of South Africa in recent times, one of the reasons being the currently high tax rates for individuals in South Africa. and a threat of future increases. , without the trend running out of steam. “

Kader said some of the taxes that are on the agenda and remain hotly debated include:

  • A more permanent “wealth tax” or “inheritance tax”;
  • A possible “digital tax”, based on the model recently published by the Organization for Economic Co-operation and Development (OECD);
  • A possible ‘green tax’, the principles of which are currently being debated by the OECD.

The tax gap

Closing the tax gap – broadly described as taxes collected versus what should be collected – is one way to help fund additional spending, Kader said.

“Estimates of the tax gap vary, and some commentators put it at around R200 billion. In recent months, SARS has stepped up its law enforcement efforts, and SARS Commissioner Edward Kieswetter recently confirmed that the organization has made progress in closing the tax gap. How much and if this is sustainable remains to be seen. “

“I would be bold enough to subscribe to Minister Godongwana’s instinct that South Africa cannot get out of the fiscal hole it finds itself in. At this point, it would be prudent to take the bold step of restoring confidence and unleashing them to spur growth by cutting taxes and getting companies to reinvest.

Kader said the MTBPS is also likely to clarify how Godongwana intends to operationalize the economic stimulus package which proposes new investments in energy, water and sanitation, roads and bridges, human settlements, health. and education, digital infrastructure and public transport.

More importantly, as a priority, it should provide certainty on the steps Godongwana will take to implement the structural reforms he mentioned that need to be implemented to create a more conducive business environment, she said. .

“This includes repairing our power supply, addressing the problem of freeing up spectrum, improving logistics, greening our economy, and improving the ease of doing business.”

 

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