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Mboweni says income, corporate tax unlikely to rise

But Treasury is reportedly mooting an inheritance and so-called solidarity tax.
With the ratio of tax revenue to GDP at 26% compared to the global average of 15%, Mboweni doesn’t have much room to manoeuvre. Image: Kopano Tlape, GCIS

South African Finance Minister Tito Mboweni told selected clients of two of the country’s biggest banks that the National Treasury has no plans to boost income, corporate or value-added tax even as the coronavirus decimates the nation’s finances.

The Treasury is discussing the possibility of an inheritance tax and a so-called solidarity tax in a bid to raise additional finances, two people who listened to the calls with hundreds of clients of Standard Bank and Absa said. They asked not to be identified because the calls were private.

Mboweni’s room to raise levies for individuals and companies is limited, with the ratio of tax revenue to gross domestic product at 26% compared to a global average of 15%, according to World Bank data.

Increasing value-added tax (Vat), which the government has done only twice since 1991, is unpopular within the ruling ANC because it is seen as affecting the country’s poorest people hardest. Taxes on the wealthy are favoured politically and a solidarity tax, associated with the virus outbreak, would be limited in duration.

In a special adjustment budget last week, the government cut its revenue projection for the current fiscal year to R1.12 trillion from the R1.43 trillion it estimated in February as the virus and the associated lockdown reduced business activity.

Mboweni said an additional R40 billion in tax will be raised over the next four years, without providing more details.

The Treasury, Absa and Standard Bank declined to comment.

Tax rates

South Africa’s top income tax rate is 45%, corporate tax is 28% and Vat is 15%.

In February, when the annual budget was released, the Treasury said it decided not to raise taxes due to the weakness of the economy and was considering lowering the levy on companies to boost the country’s competitiveness as an investment destination among emerging markets.

Since then, South Africa has lost the last investment-grade rating on its debt and the country on March 27 entered a lockdown to curb the spread of the virus.

While the government is gradually easing those restrictions, the Treasury forecasts GDP will contract 7.2% this year.

© 2020 Bloomberg L.P.

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What a load of nonsense. We keep on hearing the narrative that higher taxes will affect the poor. The poor are not tax payers – they are tax receivers (thought social grants). The real burden falls to the middle class.

How is a higher tax on the wealth producers going to bring in any significant revenue. The only wealth producers left are me, and possibly you. LOL.

Also an inheritance tax in a pandemic? That is pretty callous. Taxing the victims extra.

WHO are these people “selected clients of two of the country’s biggest banks”?????

I also pay taxes, I should also be given selected information.

there is a clear meassage here. Who are the group with the most assets that are inheritable? That is the group being targeted as the highest income tax payers now are the people not targeted. think about those 29000 government million rand babies – we do not want to tax them more now do we

Firstly, the current social grants, free housing, free education, food schemes, free electricity is unsustainable. You cannot continue to take from the few that are working and give to the majority that want everything for free because they believe it is their right.

The ANC government has to address the elephant in the room which is the unsustainability of the current social welfare costs. They should find ways to grow the economy so that people can start taking responsibility for themselves and their actions instead of relying on government a.k.a. tax payer.

One of the things that struck me as i watched or saw pictures of people standing in queues that were kilometers long waiting for food parcels, was the fact that they were standing in areas that had perfectly good, vacant land which they could have used to plant fruit and veggies to help sustain themselves. But they would rather go hungry than help themselves.

The other thing that needs to be addressed is the population explosion among the poor, who mainly rely on social grants. Firstly, get people to understand that if you cannot feed yourself then you should not bring children into the world. Secondly, force men to take responsibility for the numerous children they have with multiple women. We currently have approx. 13 million children (under 18 years of age) on grants, that is costing the tax payer approx. R5,8 billion per month @ R450 p/m. These children are also on the government feeding scheme at school. It is unsustainable to expect the tax payer to take of these children for 18 years min. And if that was not enough, the tax payer then has to take care of tertiary education at a cost of billions per year.

And if all that was not enough, we also have immigrants/foreigners who come here and make use of our social welfare. The government should control this so that it does not add to the burden of the already over burdened South African taxpayer.

Secondly, the ANC government should STOP STEALING the tax money so that we can continue “giving to the poor and needy” who will remain so because it is easier to live off others than work hard.

So, if the ANC government wants South Africa to become another Zimbabwe then they can continue to push the “makers” out of the country until they are left with the “takers” only.

End of comments.

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