Mini budget: Nene talks of tax reform

Tax changes are likely to be introduced in February when Finance Minister Nhlanhla Nene tables his first full budget, he signalled on Wednesday in his medium-term policy statement.

Nene revised the revenue forecast for 2014/15 to R1.093 trillion, or 29.5 percent of GDP, warning that it was insufficient to cover expenditure.

He said increasing state revenue was part of plans to put public finances onto a sustainable footing, but at this stage there was no explicit statement from Treasury that this will mean an increase in personal income tax.

The minister said the recommendations of the Davis Tax Committee –appointed by his predecessor Pravin Gordhan to review South Africa’s tax policy framework — would be tabled in the 2015 budget.

“Government’s proposals will balance several policy objectives,” he said.

“These include enhancing the progressive character of the fiscal system, improving tax efficiency and realising a structural improvement in revenue,”

He added: “The short- and long-term implications for economic growth and job creation will be a key consideration.”

The minister acknowledged that his measures to rebuild fiscal space may have “a dampening effect on economic growth in the short term”, but said this was essential to sustain investment and revive growth in the longer term.

Asked whether this meant higher income taxes, Nene reiterated to reporters, ahead of his speech to the National Assembly, that new taxes are traditionally only announced in February.

Source : Sapa /ef/rod