'Govt may hike individual tax'

[DarkDenim]

Uh oh...

Johannesburg - With 2009 being an election year, tax experts say that government will seek more money to fund its social objectives and that it will be easier to collect more tax from individuals.

Discussing budget revenue trends at a briefing, Ernst & Young tax experts agreed that in an economic downturn it will be easier to collect taxes from individuals. "It's possible that Treasury will push up the maximum tax rate to more than 40%," said Corlie Hazell, a director in corporate tax. "Travel allowances may be watered down even further as that is the only tax deferral mechanism left for individuals," she said.

She said there had been a lot of debate around increasing value-added tax (VAT) on goods likes refrigerators and washing machines.

David French, an associate director in international tax said recently introduced provisional tax and administrative penalties will also help plump up revenue coffers and enforce compliance, which will have individual taxpayers even more out of pocket.

"Provisional taxpayers will be charged hefty penalties if they don't estimate their second provisional tax payment within 80% of the actual figure," he said. "From 1 January this year, taxpayers will be fined up to a R1 000 if they don't comply with the smallest of administrative prescriptions, like informing SARS of their change of address."

The South African Revenue Service (Sars) was likely to be more aggressive in its collection approach to maximise collections in a tough market, with the panel saying individual taxpayers could expect more callbacks and frivolous queries from the taxman in the upcoming year.

The panel advised people to ensure their tax affairs are well-managed in order to avoid protracted arguments with Sars and avoid unnecessary penalties.

http://www.fin24.com/articles/defau...1518-2386-2432_2456099&IsColumnistStory=False

 

[icyrus]

Par for the course really. Wouldn't expect anything else from an organization like the anc.

 

[LazyLion]

bleed every stone dry! suck every well to dust!

make one generation pay for the sins of ten.

 

[Sneeky]

but the ANC nitwits said everything they had in their manifesto had already been considered in the budgets, why more gravy I ask?

 

[MacNabs]

There is never enough gravy.

 

[Gothan]

Like one guy said in the comments section, I don't think the ANC (no matter how a hive of scum and villany they are), will raise personal tax in election year, they might increase tax on other things, but I don't think personal tax will be one of them (IMHO of course)

 

[DarkDenim]

Perhaps not...

Due to the early closing of Parliament on the February 13 this year, in preparation for the elections in April, Finance Minister Trevor Manuel will be delivering his annual Budget speech early, on the February 11.

A number of factors will influence this year's Budget, which need to be borne in mind when trying to "anticipate" what Manuel may announce:

Election year:
Clearly the ANC will wish a Budget that will win votes. Government's usually do this through announcements of reduced taxes and additional spending on social welfare. Each of Manuel's Budgets to date, have, without fail, brought good news in these areas. Thus, we can have no doubt that there will be an adjustment to personal tax rates to counter, at the very least, the effects of bracket creep (the effect of inflationary wage increases resulting in the individual paying tax at a higher rate and thereby receiving less in real terms), and increases in the amounts provided for the disability and old age grants and the child support grant. As mentioned last year, the qualifying age for the old age grant will be reduced from 63 to 61 this year.

Announcements relating to spending on housing, education, security and health spending will, as usual, be forthcoming. In order to assist the purchase of housing we may see an increase in the value at which a home may be purchased without transfer duty, to, perhaps, R1m (currently R500 000). In addition, to counter the high interest rates, increase the ability for lower income groups to purchase their own homes and simultaneously stimulate the economy a tax break on interest paid on mortgage bonds up to a defined limit raised to purchase a primary residence would be welcomed.

Without taking secondary tax on companies (STC) into account, the corporate rate is in line with international norms and is therefore unlikely to be reduced further. Since STC is to be removed some time in the 2010 fiscal year, and replaced with the withholding tax regime previously announced and now legislated, pending an effective date and expected further amendments, the corporate tax rate will be comparable to other countries. It may, however, be necessary to reduce the tax for foreign companies doing business in South Africa from the current 33% to a rate more in line with local companies.

Significant changes were made to exchange control last year and, consequently despite calls for a tightening, there is likely to be little changed this year.

In summary, good election substance, but nothing dramatic.

Manuel's last Budget?
Despite the possibility that this could be his last Budget, Manuel is unlikely to do anything rash to "go out with a bang". His level of maturity is such that he will want to leave the country's finances in a healthy, controlled state. His reign as finance minister has seen many significant changes to the tax regime. To name a few of the more significant ones: the move from source to residency based tax; the introduction of CGT; the introduction of provisions which move toward group taxation; the change to the taxation of retirement payouts and other retirement tax reforms; the revamping of the anti-avoidance legislation and introduction of reportable transaction rules; the introduction of an advanced tax ruling regime; and more recently the imminent removal of STC. The extent to which exchange controls have been relaxed has been significant if looked at in relation to when Manuel came to office. Thus, really no need to do anything significant this Budget.

In summary, nothing dramatic expected.

The world economy
In his mini Budget in October last year Manuel acknowledged the "coming storm" consequent on changes in the world economy. "Global economic growth will slow for several years, our export earnings will be negatively affected and it will be more difficult to finance our investment needs" he said. However, Manuel is taking this all in his stride and indicated that the change was anticipated. The country's low levels of debt and fiscal discipline are helping to cushion it. However, whereas, previously, a Budget surplus was planned, it is considered that in the 2009/10 Budget a small deficit will be ‘the right thing to do'. This is necessary as it is expected that, in the coming year, the revenue from corporate taxes and VAT will not grow at the same levels as in the last few years.

In summary, a conservative approach and, other than moving into a Budget deficit, nothing dramatic expected.

Fiscal discipline
Fiscal discipline underpins all the conclusions reached above, and nothing less is expected of Manuel and his team.

Source

 

[KillerX]

I heard that with all these extra grants being added... it ends up being BILLIONS more out of goverment budget. The problem is that they didnt budget for it at all. So guess what? You and me and paying for it.

I wouldnt have a problem with high tax rates if I actually got something in return for it (like europe), but the problem is you dont get security, or education or healthcare, or decent roads for it. You have to pay extra for most of these services.

So far its only speculation tho, but Zuma WILL be taking over in April, and I think there is a big 'shift' coming. We'll have to wait and see.

 

[Kosmik]

If what Dark Denim quotes in his second post is true, I'll be quite happy with the decrease in transfer cost for properties and a tax break on your mortgage would be quite nice as well.

This would help quite a bit of debt in the country as most people's largest liability are their homes.

 

[Gothan]

Well IMHO, I don't really think we will get any tax breaks, but I don't think there will be in increase. Not only is it election year, we are also in a global economic crisis

 

[Gaz{M}]

I would gladly pay more tax if it actually benefitted me. But as KillerX said, I have to see to my own food, transport, medical aid, shelter, utilities, security etc. so in effect I'm paying for everything anyway. Increase my tax, but give me decent public transport, decent utilities and make this country safe again.

 

[Abe]

It would be good electioneering to increase the top percentage bracket or even add a new 42% bracket. The masses don't give a hoot about the top earners.

 

[Gothan]

But the problem that the ANC now has is not the poor majority, but the "black diamonds", the ANC is struggling to keep its two thirds majority, and they will need the black middle class for that, as well as the black elite.

But oh well, only time would tell

 

[RoosTa]

Don't the ANC realise that more workforce = more tax? They should focus on creating jobs instead of changing street names.

 

[blunomore]

If only the tax money was properly used .... not stolen or siphoned away or simply 'disappearing' !

 

[Sneeky]

Consider the downturn in the economy locally and globally, the loss of turnover to all industry, the loss of 20000 odd jobs and this all adds up to a lot of tax that will not be collected.

The automotive build is already going to be down almost 25% this year, possibly more.
The gravy is lean.

 

[Lord Anubis]

Raising taxes with nearly 6 million people defaulting on credit installments..in election year..UNLIKELY...tax cuts, interest rate cuts...LIKELY

 

[Sneeky]

Rate cuts for sure, but just wait, income from taxes will fall far short of budgeted figures.
This money will surely have to be recovered to fund ongoing projects.

 

[Kimosabe]

If tax goes up, I'm out of here. I never see my tax money in action. I look at my pay slip and wonder, where does my money go. Oh i know into the pockets of some ANC suit wearing bastard. New Zealand it is then...

 

[JungleBoy]

If tax goes up, I'm out of here. I never see my tax money in action. I look at my pay slip and wonder, where does my money go. Oh i know into the pockets of some ANC suit wearing bastard. New Zealand it is then...

I suppose you will return if we get tax breaks in the future?