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Tax hikes will hurt economy, says Lamberti

18 November 2014   (0 Comments)
Posted by: Author: Chris Barron (BDlive)
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Author: Chris Barron (BDlive)

Mark Lamberti, the CEO of logistics giant Imperial Holdings, said it would be a disaster if the government hiked personal income tax.

Last month Finance Minister Nhlanhla Nene warned in his medium-term budget speech that South Africans ought to resign themselves to paying more tax — partly to plug the yawning gap between what the government is collecting in revenue and what it is spending, and partly to pay public-sector wages.

But Lamberti said the "government has got to be really, really careful about doing that” because the country’s thin tax base was under intolerable pressure already.

"It is going to be a brave government that starts to eat into the tax base of the 6.4-million people who are paying tax. My understanding is that 1.2% of the entire population is paying 57% of the personal tax,” he said.

Lamberti said the government should rather increase VAT — "but not on basics”.

He warned that tax hikes might cost South Africa the kind of people it couldn’t afford to lose.

"To try and take more out of that small tax base will be debilitating for the country, and certainly for the morale of a number of people who are in important leadership positions.”

Lamberti, who was the CEO of Massmart before the takeover of the retailer by US-based Walmart, is a director of Business Leadership SA.

He is one of the first CEOs to raise their heads over Nene’s tax hike plan, and it will be a struggle to dissuade the Treasury, which faces the unenviable task of balancing revenue against what it is spending — particularly on public servants’ salaries.

Given that public servants represent a significant chunk of the ANC’s support base, does Lamberti see the public wage bill being cut?

"I don’t think government can afford not to do it,” he said.

Lamberti said if Nene’s proposals on fiscal austerity were followed, South Africa was unlikely to approach the World Bank and International Monetary Fund for a bail-out.

This article first appeared


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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