While the easiest way for the government to collect the revenue it needs is to raise value-added tax (VAT), this is not on the cards for political reasons, says Judge Dennis Davis, chairman of the tax advisory committee. Finance Minister Pravin Gordhan has said the government has to raise an additional R28bn in tax to meet fiscal targets over the medium term. The new tax measures will be announced in February. Davis was speaking at an Investec panel discussion in Johannesburg. He said the best options to raise new revenue were: raising the tax rate to 45% for the highest earners; clamping down on base erosion and transfer pricing by companies; and through the exchange control amnesty. It was possible that the skills development levy would be raised a percentage point to 2% to help fund increased funding to higher education. Higher corporate taxes were also not an option due to the risk of dampening investment.
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