‘Wide consultation’ on tax changes

GOVERNMENT will not unilaterally implement changes to the tax system‚ particularly those that concern business such as the proposed carbon tax and mining royalties.

“Tax policy and tax legislation therefore needs to provide certainty to business.

“Where new taxes come into being‚ like the carbon taxes‚ we take a deeply consultative approach over many years before we legislate‚” Finance Minister Nhlanhla Nene told a Bureau for Economic Research (BER) annual conference yesterday. “It is always a consultative process‚ which takes a few years for the major tax changes like the mining royalty and carbon tax‚ which have been on the cards for some time now.”

The Davis Tax Committee‚ tasked with reviewing South Africa’s tax system‚ has already recommended a slight hike in personal income taxes, implemented in April.

The committee recently released another report for public comment on how taxes could be more efficient in advancing the economy.

Other changes include the upcoming review of the employment tax incentive‚ which Nene said should be extended to all other tax incentives to gauge its efficiency and effect on the economy.

There is strong opposition to electronic tolls although government has reduced tariffs. However‚ the user-pays principle would continue to apply‚ Nene said.

Speaking on monetary policy‚ Reserve Bank deputy governor Daniel Mminele said the rand could weaken further when the US Federal Reserve raised rates.

Most analysts expect the Fed to hike rates in September or November.

A weak rand would stoke inflation‚ Mminele said.

BER senior economist Hugo Pienaar said economic growth was “unlikely to see much of a recovery” in the second quarter following growth of 1.3% in the first quarter. An earlier-than-expected interest rate hike was possible‚ he said, given rising inflation. — BDlive