DENNIS DAVIS: Mboweni’s tax tightrope
With little scope to hike tax, Mboweni’s plan is for Sars to become a whole lot better in collections
Finance Minister Tito Mboweni’s budget is built on two fundamental assumptions. The first is that given the precarious nature of the economy, any significant tax increase would, in the short run at least, depress further economic growth. The second is that the deficit could be maintained within acceptable boundaries if the public wage bill is reduced over the next three years by R160bn.
The first assumption is the least controversial. The economic structure inherited from apartheid luminously reflects the gross level of inequality that has not improved in any meaningful way since 1994. For the purposes of tax policy, that means SA’s tax profile resembles a pyramid: of 13.8-million taxpayers, only 308,000 make taxable income of more than R1m and only 125,000 make taxable income of R1.5m or more. In all, 40% of income tax is paid by these people...
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