|National Treasury calls for open dialogue|
National Treasury calls for open dialogue
NOVEMBER: Ismail Momoniat, Acting Director-General, National Treasury made a call for a deeper level of engagement between SARS and the tax payer, especially when tax proposals and reforms are being tabled.
Speaking in Johannesburg at the Indirect Tax Summit hosted by the SA Institute of Tax Practitioners (SAIT), Mr Momoniat pointed out that the tax payer, as an individual, is severely limited in their wherewithal to question tax proposal policies, and therefore prior engagement with all stakeholders should become part of the process before tax policies are implemented.
Good fiscal policy rests on three pillars; sufficient revenue to cover public expenses, optimal allocation of public funds and the public debt management, explains Mr Momoniat. “Tax will always be an emotional issue, but if we can improve the consultative process between the revenue service and their constituents it will be easier to illustrate how the benefits of a healthy revenue system far outweigh the costs.”
“The primary objective of any tax policy is to raise revenue for the government to carry out their civil commitments,” comments Stiaan Klue, Chief Executive of SAIT. However, this needs to be carefully balanced with the social objectives that seek to change or modify behaviour to encourage more prudent decisions, as in tax incentives for retirement savings. “In order for our revenue service to remain competitive on the international stage, SARS needs to address market failures where the private costs do not reflect in the social costs.”
Indirect taxes are levied on the transaction and not the person, and in the case in South Africa,
In his address which provided an overview of indirect tax, Mr Momoniat raised the example of carbon tax as an area where environmental fiscal reform is critical for the sustainability of our future. However Momoniat was quick to point out that this is another area where consultation with relevant stakeholders is crucial before a blanket implementation. “We need to partner with industry specialists and environmental scientists, who are able to guide the tax implementation to ensure we are achieving the correct long term objectives.”
Complicated tax systems run the risk of high evasion and increased corruption. “In order to both grow and increase the compliance of the tax base an effort must be made to improve operational simplicity in the revenue system,” comments Klue who welcomes the consultative approach being mooted by Momoniat. “Effective dialogue between all the important stakeholders will streamline the implementation of new policies and reforms.”
The South African Institute of Tax Practitioners (SAIT) is the largest of the professional tax bodies in South Africa, and seeks to enhance the tax profession by developing standards in education, compliance, monitoring and performance. SAIT contributes to the development of world class professional practises and people. The Institute plays a leading role in developing sound tax policy and shaping fiscal legislation through participation in, and dialogue with, Parliament. SAIT actively contributes to industry leading thought leadership content and guidance to taxpayers. Through SAIT’s international network, and influence as chair of the global Tax Directors Forum, South Africa participates and contributes to the work of the OECD, and the Institute regularly hosts international tax conferences and summits in support of the national developmental agenda.
2016 Personal Income Tax - Potchefstroom