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Could share transfer taxes be increased?

17 February 2016   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneyweb)

PwC shares its budget expectations.

Increasing the securities transfer tax from the current level of 0.25% to up to 0.5% is one of the possible options available to government to raise additional tax revenues, PwC has said.

Securities transfer tax applies to the purchase and transfer of listed and unlisted securities, including shares.

Speaking about the firm’s budget expectations, Kyle Mandy, tax policy leader at PwC South Africa, said although there are questions about the impact this might have on equity markets, increasing the rate to 0.5% could raise around R5 billion in additional revenue.

Mandy said while some countries do levy taxes on share transfers in terms of stamp taxes, others don’t. In the UK, stamp taxes are levied at 0.5%, but countries like Australia don’t have stamp taxes on share transfers at all.

"It is a difficult question, but perhaps an appealing possibility in the current environment for Treasury.”

One of finance minister Pravin Gordhan’s biggest objectives will be to convince credit ratings agencies that government is running a tight ship and implementing prudent fiscal policies.

Prof. Osman Mollagee, partner for tax international services at PwC, said if fiscal deficits were to widen, the next step would probably be a downgrade, although he expects that this would be avoided.

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