Supplementary Budget 2020

Mboweni likely realised a tax ceiling has been reached in SA

Compared to significant tax increases in the last four years' Budgets, the latest delivered by Finance Minister Tito Mboweni on Wednesday appears to show an acceptance that taxation levels in SA have reached a ceiling, says Melanie Milleskie, tax expert at Deloitte Africa.

Milleskie believes Budget 2019 was about hard facts and figures, sending a clear message that the economic backdrop should be acknowledged – and with growth stimulus and addressing government debt in the foreground.

Taxes must be fair

"It is clear that individuals are significantly taxed in South Africa, and it is very important for taxpayers to feel they are taxed fairly.

"This must have weighed heavily in the decision not to raise personal taxes this year," she said at a post-Budget event hosted by Deloitte Africa in Cape Town on Friday.

"Personal income tax continues to be a significant contributor to SA's tax revenue. Although Mboweni did not adjust personal income tax brackets, any effective relief will be diluted due to inflation in the higher tax brackets."

Make SARS more efficient

Instead, Mboweni is rather focusing on what Milleskie calls "streamlining" processes at the SA Revenue Service (SARS).

"On the tax administration side, Mboweni made proposals to make SARS more efficient. We can also expect to see a new SARS commissioner announced likely in the next couple of weeks," said Milleskie.

In her view, a much-needed improvement in SARS' IT systems is imperative to improve tax collections.

"Taxpayers should be able to submit returns easily, be assessed easily, have it finalised quickly, and get tax refunds paid as soon as possible," said Milleskie.

"With so much additional data available to SARS, and information received from revenue authorities all over the world, a sophisticated IT system is required to look at and reconcile data from various sources. Only then will SARS be able to fully collect the taxes due."

She expects this approach will be a continuous focus for Treasury.

"The proof of success will, of course, have to be in what SARS ends up being able to collect," she concluded.

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