The withdrawal of a tax proposal that would have saved South African taxpayers about R15bn ($1.25 billion) may lead to slight narrowing of the budget deficit.
The proposal to reduce the threshold against which contributions to the nation’s Unemployment Insurance Fund are calculated won’t be implemented as it could lead to "unintended consequences,” the Pretoria-based Finance Ministry said in an e-mailed statement on Thursday.
The decision removes a concession to taxpayers in a budget that raised the personal income tax rate for the first time in more than two decades. Finance Minister Nhlanhla Nene announced in February that contributions to the fund will effectively be capped at R10 a month for one year.
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.