Government will not ‘act unilaterally on tax’
15 June 2015
Posted by: Author: Ntsakisi Maswanganyi
Author: Ntsakisi Maswanganyi (BDlive)
Government will not unilaterally implement changes to the tax system, particularly those that concern business such as the proposed carbon tax and mining royalties.
"Tax policy and tax legislation therefore needs to provide certainty to business. Where new taxes come into being, like the carbon taxes, we take a deeply consultative approach over many years before we legislate," Finance Minister Nhlanhla Nene told a Bureau for Economic Research (BER) annual conference on Friday.
"We do not have an ad hoc approach to taxation. It is always a consultative process, which takes a few years for the major tax changes like the mining royalty and carbon tax, which have been on the cards for some time now, " Mr Nene said.
The Davis Tax Committee, tasked with reviewing the country’s tax system, has already recommended a marginal increase in personal income taxes implemented in April. The committee recently released another report for public comment on how taxes can be more efficient in advancing the economy.
Other changes include the upcoming review of the employment tax incentive, which Mr Nene said should be extended to all other tax incentives to gauge its efficiency and effect on the economy.
The user-pays principle would continue to apply, Mr Nene said. There is strong opposition to electronic tolls although government has reduced tariffs.
Speaking on monetary policy, Reserve Bank deputy governor Daniel Mminele said the rand could weaken further when the US Federal Reserve raised rates. Most analysts expect the Fed to hike rates in September or November.
A weak rand would stoke inflation, he said. "Exchange rate developments continue to pose the single biggest risk to SA’s inflation outlook."
On the economy, Bureau for Economic Research senior economist Hugo Pienaar said economic growth was "unlikely to see much of a recovery" in the second quarter following growth of 1.3% in the first quarter. Weak demand and the effect of load shedding on output would be the main factors weighing on economic growth, he said.
The bureau forecasts the economy to grow by 1.7% this year, 2.1% next year and 2.6% in 2017.
An earlier than expected interest rate hike was possible, Mr Pienaar said given the rising inflation.
This article first appeared on bdlive.co.za.