Johannesburg – Finance Minister Malusi Gigaba will have to put South Africans, ratings agencies and international markets at ease about the country’s fiscal position when he delivers the mini budget on October 25, said a tax expert.
Ettiene Retief, chairperson of the national tax and SA Revenue Service (SARS) committee as the SA Institute of Professional Accountants, said there was a lack of trust among taxpayers due to fruitless and wasteful government expenditure.
“In order to regain the trust of taxpayers they will have to be convinced that expenditure incurred by government is ‘reasonable’,” he said.
SARS has missed its first quarter revenue target by R13bn.
Tax collections for Personal Income Tax, Corporate Tax and VAT are all expected to be lower than February projections, said Retief.
“The procedures followed by SARS to collect and administer the tax system must be seen to be reasonable. More aggression is likely to lead to more resistance from taxpayers,” he said.
“It is essential that SARS remains efficient and robust in its collection and administration of the tax base."
“However, there are concerns that there is slippage in tax compliance and that taxpayers can expect more aggressive treatment from the taxman,” said Retief.
This echoes what Tax Ombud Judge Bernard Ngoepe said at the launch of his office’s annual report for 2016/17 on Tuesday. Ngoepe stressed the importance of SARS treating taxpayers fairly.
This will motivate people to comply with their duties, he explained.
“We don’t like SARS to adopt a ‘skop and donner’ attitude, we want them to treat people fairly,” said Ngoepe.
He also called for SARS to practice good governance, saying this impacted the morale and confidence people have in the system.
Retief said that reports of corruption and wastage by government would make taxpayers more reluctant to give their “hard earned” money to the revenue service.
“South Africans will need clarity on how Minister Gigaba is going to adjust his budget,” he said,
“They will also need assurance that government will keep expenditure in check, and even cut costs at non-performing entities,” said Retief.
Old Mutual Investment Group head of economic research Johann Els projects a shortfall in revenue collection for SARS of around R50bn this year, as does Momentum Investments economist Sanisha Packirisamy.
Packirisamy has suggested that Gigaba may have to look to other revenue streams, such as fuel taxes, higher sin taxes, and possibly the removal of medical aid tax credits, to claw back some of the shortfall.
Retief, meanwhile, expects government's Special Voluntary Disclosure Programme to provide a boost to revenue collections. Gigaba is expected to give further details on how well the programme worked at the mini budget.
Retief noted that the mini budget woulf also provide an indication of how the state intends to tackle fiscal challenges over the next three years. “The question [is] whether the minister will stay on the course set by the previous minister [Pravin] Gordhan, or will he present revised fiscal policy objectives and spending priorities going forward?”
“He must be able to convince international markets that all is under control," added Retief.
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