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‘Supertax on wealthy earners could be reintroduced’

Monday, 01 February 2016   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneyweb)

Deloitte commentators share their budget expectations.

The coming tax year will be a "watershed year” for tax hikes, which will likely come from a wide range of sources, a tax specialist has warned.

Speaking at a Deloitte budget roundtable, Nazrien Kader, head of taxation services, said when finance minister Pravin Gordhan takes to the podium for the first Budget Speech of his new term, he will have to walk a tightrope of a nature no local finance minister has ever had to in the past.

Since the Medium-Term Budget Policy Statement (MTBPS), South Africa’s economic growth prospects have deteriorated considerably. Earlier this month, the International Monetary Fund (IMF) slashed its growth outlook for the year to 0.7% from an earlier 1.3%, suggesting that revenue collection could come under severe pressure going forward.

Moreover, ratings agencies will be keeping a watchful eye on South Africa’s finances. Commentators have warned that the country’s sovereign credit rating may be downgraded to junk later this year – a situation the minister will want to avoid at all costs.

"I think the challenge to minister Gordhan is to generate taxes without penalising growth or exacerbating inequality,” Kader said.

Armchair budget observers would also be watching the budget carefully to evaluate the consistency in messages from the commissioner of the South African Revenue Service (Sars), Tom Moyane, and the minister of finance. This follows after Gordhan, a former commissioner himself, reportedly halted Moyane’s efforts to restructure the revenue authority, she said.

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