Tax pain looms

ANALYST: TAXPAYERS WILL CARRY BURDEN OF GRAFT-RELATED DECISIONS Finance minister likely delaying it until after new ANC president is elected.

Political uncertainty in the ruling party and President Jacob Zuma’s pending political demise after December may have influenced Finance Minister Malusi Gigaba’s decision to shelve a tax hike announcement, experts say.

One of the experts said taxpayers have begun to pay for state capture, which had disrupted the smooth running of the South African Revenue Service (Sars) due to political interference under the Zuma administration.

Tax hikes had been expected to offset a tax revenue shortfall of R50.8 billion, which emerged in Gigaba’s medium-term budget policy statement for the current financial year. But instead of announcing the increases, Gigaba chose to leave it to February next year, when he delivers his main budget address.

Political analyst Andre Duvenhage said Gigaba’s timing was related to the upcoming ANC national elective conference in December.

“The timing would be negative before the conference, because they are not sure who will win the ANC presidential race between Cyril Ramaphosa and Nkosazana Dlamini-Zuma,” he said.

Gigaba would rather postpone the announcement until it’s known who the new ANC president is and possibly the future president of the country. They were unsure if Ramaphosa would follow their approach if he becomes the president, he added.

Ramaphosa was clear about the need to investigate state capture and end corruption and put those responsible behind bars.

David French, tax consulting director at Mazars, said the low tax revenue had more to do with the country’s economy not being as robust as in the past. “Our economy is not doing as well as expected. It may well be inefficiency at Sars due to low morale, but it can’t only be because of that,” he said.

Duvenhage said Gigaba would be looking at energy price increases, including for fuel, to make up the revenue shortfall.

“I won’t be surprised if they increase income tax for wealthy people,” he added.

“The problem is our taxpayers are already overtaxed, putting more tax hikes in place would result in more resistance from them.”

The analyst attributed the current revenue morass to a dwindling efficiency in tax collection by Sars due to political manoeuvring at the top.

Taxpayers are being made to pay for the Zuma government’s removal of those seen as fighting corruption, particularly state capture, through trumped up allegations.

Sars was doing well in revenue collection until senior employees, such as Ivan Pillay and Johann van Loggerenberg, were targeted and ousted, he said.

“We need to ask ourselves if we are not paying for state capture,” Duvenhange said.

French agreed with Duvenhage on the effect of the removal of senior Sars officials in low revenue collection.

He said the ANC leadership election may be another plausible construct in the minister’s decision not to announce tax hikes as “he doesn’t want to annoy anybody at this point”.

He doesn’t want to annoy anybody at this point.