THE MEDIUM TERM BUDGET: Snippets on the Medium Term Budget Policy Statement
Recent Gauteng Business News
Notes on the Medium Term Budget-
AJ Jansen van Nieuwenhuizen, director and head of Tax, Grant Thornton Advisory Services
1. It is encouraging that the focus of the speech was on the expenditure side, rather than on the increase in revenue. Although there has been widespread speculation on possible increases in the top marginal tax rate for individuals as well as the funding mechanisms for the proposed NHI, there has been no specific mention of such increases. However, with a proposed increase in government debt from 23 per cent of GDP to 40 per cent in 2015, the primary funding mechanism will always be tax revenue and increases in tax rates could still be on the cards for the 2012 Budget Speech.
2. The Minister of Finance, as in previous speeches, has again highlighted the issue of wasteful expenditure in government, for which we applaud the Minister. He has indicated that he will task the Auditor General to focus on the reporting of savings by the various governmental departments. Reporting is one thing, but the focus should shift to the heads of these departments being taken to task, and where appropriate, to removing them from office.
3. The mention of simplifying procedures and reducing costs relating to cross-border money remittances, particularly to neighbouring countries and the rest of Africa, will provide a much needed boost to South Africa truly becoming a gateway to Africa.
4. Of concern is the mention that in the longer term, we must realise a rising floor of social and economic rights. This was not expanded on, but there should be concern that there will be further increases in the number and extent of social grants. The reference to economic rights was also not expanded on, but could this be a veiled reference to nationalisation
5. Reported tax revenue projections of R729 billion are R13 billion behind the February budget estimate, with higher than expected collections from Customs duties and Import VAT compensating for lower VAT receipts and lagging corporate tax collections.
Brian Dennehy, director: Tax at Webber Wentzel The Medium Term Budget
On tax incentives
R8-billion of the allocated R20 billion budget for industrial investment, technology, and training has already been utilised on recently approved projects.
Taxation Laws Amendment Bill
The Taxation Laws Amendment Bill has now been issued as a final money bill. Taxpayers now at last have certainty regarded the much-debated section 45 intra-group transaction rules and the section 8E/8EA hybrid equity instrument and third-party backed share rules.
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