Raise taxes on rich to boost revenue, says OECD
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.