Raise taxes on rich to boost rev­enue, says OECD

CityPress - - Business - – Bloomberg

Gov­ern­ment should in­crease taxes on wealth­ier in­di­vid­u­als to help boost rev­enue needed for the na­tion’s grow­ing de­mands, the Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment (OECD) has rec­om­mended.

“The tax base is nar­row and rev­enues are too small to meet fu­ture spend­ing needs,” the Paris-based group of 34 de­vel­oped na­tions said in its Eco­nomic Sur­vey on South Africa, which was re­leased on Fri­day.

“The public sec­tor will face con­sid­er­able re­source needs in the years ahead to ex­pand so­cial and eco­nomic in­fra­struc­ture. Meet­ing these needs will re­quire in­creased rev­enues,” the re­port said.

In Fe­bru­ary, Fi­nance Min­is­ter Nh­lanhla Nene raised taxes on mid­dle- and high-in­come earn­ers for the first time in two decades to help bol­ster rev­enue in the face of slug­gish eco­nomic growth.

He wants to nar­row the bud­get deficit to 2.5% of gross do­mes­tic prod­uct in the year to March 2018 from an es­ti­mated 3.9% this year.

The gov­ern­ment be­gan a re­view of its tax sys­tem last year, con­ven­ing a panel led by Judge Dennis Davis.

The panel rec­om­mended in a re­port this month that the gov­ern­ment raise value-added tax rather than lift­ing per­sonal and cor­po­rate taxes. The OECD said South Africa should im­ple­ment a car­bon tax and en­sure that the rate rises grad­u­ally to be ef­fec­tive.

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