Congratulations PG for a pragmatic and well-balanced budget!

However, of particular concern is the still growing education expenditure - which, by the way, is the single biggest expenditure item on the South African budget.

Education expenditure as a percentage of GDP is well above the world average and has remained this way for quite a numbers of years. PG, the problem is not the amount of money we spend, but the outcomes of our education system.

In all international tests of South African learners, such as the Progress in International Reading Literacy Study (PIRLS) and Trends in International Mathematics and Science Study (TIMMS), South African learners come last. African countries who spend much less than South Africa on education, such as Botswana and Ghana, come ahead of and outperform South African learners! Moreover, when comparing the results of high school finishers across 19 emerging market economies, South Africa is ranked second last.

When comparing the entry into tertiary institutions, South Africa finishes last among all emerging and developed countries. This happens despite South Africa spending well above average on education. Out of 40 countries that took part in a recent study in reading and literature - South Africa came last. The average age of the South African Student was 1,9 years older than the average age of the international student. Shocking!

What is the bottom line? The South African labour force is poorly educated when compared to other emerging markets. South Africa has less than a third of the tertiary educated workforce than that of the emerging market average.

While developing countries generally have few people working as a percentage of the population, it is becoming clear that South Africa is at the lower end of the spectrum – leading to a high tax burden on the working population. When taking overall taxes as a ratio of the population employed, one can see that economically active South Africans have one of the highest burdens in the world.

If this situation continues... we will certainly not only strangle, but kill the geese that lay the golden eggs.

Yours truly,
Stiaan Klue

During the 2009 Budget speech, the following changes to travel allowances were announced. From March 1 2010, 80% of a travel allowance will be subject to Pay-As-You-Earn. In addition, the use of deemed kilometres will fall away and a travel log book must be kept by all employees who receive a travel allowance.

To pay or not to pay, that is the constant battle between tax authorities and taxpayers, and this is especially the case when a tax authority and a taxpayer are in dispute about the amount of tax owed.

The new "green tax" on vehicle carbon emissions will add about R1.2bn a year to government coffers, but it is unlikely do much to reduce the country's carbon emissions. The government's purpose in imposing the tax on all new passenger vehicles is to make South Africa's vehicle fleet more energy efficient.

In his first annual budget, Finance Minister Pravin Gordhan gave South Africans a windfall of R6.5 billion worth of income tax relief, but raised fuel taxes by 25.5 cents a litre. Despite a massive tax revenue shortfall that is expected to continue, Gordhan said he had decided not to raise the tax burden on South Africans because of the strain the recession had placed on households.

The annual budget breakfast of the Institute was held on 18 February at the Sandton Convention Centre, with a video broadcast to Durban International Convention Centre, Cape Town International Convention Centre, King Edward Hotel Port Elizabeth and the President Hotel in Bloemfontein.

SAIT attended the first SARS National Stakeholders meeting on 23 February.

The South African Revenue Service (SARS) will extend its operating hours at all branch offices on Thursday 25 and Friday 26 February 2010. Branch offices will open at 07:30am and close at 17:00am to facilitate taxpayers in meeting their payment deadlines.

SARS comunicated the impending changes regarding the amount of a subsistence allowance deemed to have been expended in terms of section 8(1)(c)(ii) of the Income Tax Act, 1962.

SARS is conducting an important survey amongst tax practitioners. This anonymous feedback will be used to help SARS understand the nature of practitioners' engagements with SARS, and to enhance its service offerings to practitioners.

SARS released the updated EMP201 guide for employers which deals with the new monthly declaration process.

The Taxation Laws Amendment Act, No 17 of 2009, introduced minor changes to the employees’ tax treatment of medical aid contributions. These changes come into effect on 1 March 2010.

The world is recovering from the worst crisis since the Great Depression, leaving a strong and lasting impact on Member countries’ public finances. This paper analyses how sub-central governments (SCG) are affected and how fiscal policy has reacted in the first months after the outbreak of the crisis.