Is SA’s latest tax mix appropriate for the country’s needs?
The 2017-18 budget was populist but not necessarily sustainable, with just 100,000 taxpayers carrying the burden for increased revenue, writes Tracy Brophy
After much speculation over the past few weeks as to how Finance Minister Pravin Gordhan would "plug the deficit" in his budget speech on February 22, he has chosen to rely on personal income tax (including trusts) by increasing the top-end rate from 41% to 45%, a dividend withholding tax increase from 15% to 20% (with immediate effect), and increased fuel and Road Accident Fund levies. The appropriate tax mix for SA has been a matter of discussion since the Davis Tax Committee (DTC) issued its interim macro-analysis report for public comment in June 2015. The issue of engaging the "appropriate lever" to generate revenue was considered. The DTC released statistics that indicated personal income tax and corporate income tax would need to be increased by 6% and 5% respectively, to generate the same increase in revenue as a 3% increase in VAT. It is considered that a VAT increase would have a less negative impact on GDP and employment, since an increase in personal income tax may encou...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.