Nene says new tax measures will take time to show results
FINANCE Minister Nhlanhla Nene yesterday said the tax measures that the government introduced earlier this year were yet to take effect, as the outlook for tax revenue collection remained unchanged.
The undercollection of taxes by the SA Revenue Service (Sars) has been a major concern for the government for a while. Nene said the government had now pinned its hopes on the commission of inquiry into the affairs of the revenue service, adding that President Cyril Ramaphosa was finalising the terms of reference.
“Any tax revenue collection agency must, like Caesar’s wife, be above suspicion,” Nene said during the National Treasury’s budget vote in Parliament yesterday.
“The next major step therefore towards strengthening public finances is to restore public confidence in Sars.”
Former finance Minister Malusi Gigaba announced plans to raise a further R36 billion in taxes through, among others, a one percentage point increase in Value Added Tax to 15 percent during his budget speech in February. Gigaba also raised concerns over Sars’ undercollection, prompting the establishment of the inquiry.
Nene said the budget deficit for 2017/18 was expected to be marginally narrower than anticipated in the National Budget in February.
He said improved business and consumer confidence were set to boost economic growth. “For the first time in a very long time, it appears that economic growth will be higher than projected at the time of the Budget Review,” he added.
Meanwhile, Nene said there would be a new grant in the 2019 Medium-Term Expenditure Framework to support turnaround strategies in municipalities which had performed poorly but had shown a commitment to turn their fortunes around. He said the national government wanted to help municipalities raise additional funding. “This is a precondition if they are to be able to invest in the infrastructure needed to overcome the spatial inequalities of apartheid and ensure true transformation.
“This year we will table an amendment to the Municipal Fiscal Powers and Functions Act to allow for improved regulation of development charges,” he said. Nene said the Treasury was reviewing policy on municipal borrowing in order to support responsible borrowing for long-term infrastructure investment by credit-worthy municipalities.
He said that in order to strengthen accountability and financial oversight of municipalities, the Treasury and the Department of Co-operative Governance and Traditional Affairs had signed a memorandum of understanding to clarify their respective roles and responsibilities.
He said the Treasury had taken over monitoring, oversight, support and reporting on audit outcomes for municipalities.
Nene also dealt with the controversies that have engulfed the auditing profession. He said the recent instances of collusion with audited companies as well as general lapses had cast a bad light on the profession.
“The Independent Regulatory Board for Auditors is working with the office of the Accountant-General, housed within the National Treasury, to amend the Audit Professions Act 26 of 2005 to restore the credibility of and public trust in the audit profession,” he said.