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News & Press: National budget

Experts welcome Zuma’s call for tax system review

20 February 2013   (0 Comments)
Posted by: SAIT Technical
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By Amanda Visser (Business Day)

Executive summary

Tax experts have welcomed the President's announcement that taxpolicy will be reviewed. The president's call for a review of the tax system has been largely met with knee-jerk reactions. But the aim of the review is ostensibly to plug loopholes and deal with tax avoidance. The implementation of carbon tax is expected to be delayed by at least another year.

Full article

TAX experts have welcomed President Jacob Zuma's announcement during his state of the nation address last week that a committee will be set up sometime this year to examine tax policy.

Edward Nathan Sonnenbergs tax executive Ernie Lai King said on Monday that this was long overdue and the question that begged an answer was what exactly was South Africa's tax policy. His comments came against the backdrop of Finance Minister Pravin Gordhan once again facing a slowing economy, rising government debt, wasteful spending and a thin tax base ahead of his budget speech next Wednesday.

Mr Lai King said a "concerted analysis” should be done to identify blockages to economic growth as well as job creation, without resorting to the apportioning of blame.

"An honest and frank conversation must be embarked upon between government, labour and business,” he said.

The conversation should aim to identify the factors that adversely affect the country as a suitable foreign investor destination. Further, it should set out medium-and long-term plans to resolve the identified problems.

The president's call for a review of the tax system has been largely met with knee-jerk reactions. But the aim of the review is ostensibly to plug loopholes and deal with tax avoidance.

SizweNtsalubaGobodo tax services head Zweli Mabhoza said there was scope for the minister to clarify how the carbon tax might be implemented.

Carbon tax was first mentioned in the 2008-09 budget speech and the Treasury last year indicated that a tax of R120 per ton of carbon dioxide would come into effect from the 2013-14 tax year.

"However, it is doubtful how much this tax could raise for the fiscus, considering that Eskom — the biggest emitter of carbon dioxide — is definitely in no position to accept this obligation at present,” Mr Mabhoza said.

PwC technical tax head Kyle Mandy said he expected the implementation of carbon tax to be delayed by at least another year. "It is our view that this debate should return to whether carbon tax is in fact appropriate for SA rather than current discussions which treat it as an accomplished fact.”

Mr Lai King wished for less tinkering and more medium-to long-term planning with the tax policy and concrete measures to introduce greater accountability in combating corruption and inefficiency.

Mr Mabhoza said that Mr Gordhan would try to extract more efficiency out of the management of public funds.


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