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Every year, when I start thinking about the annual Budget Speech, I wonder what is to come. Is this the year that the corporate tax rate will change? Maybe capital gains will finally be 100% taxable? Or something more low key, like an increase in the Securities Transfer Tax?
As we approach Budget Speech Day on 26 February 2020, many people are wondering what kind of rabbit Finance Minister Tito Mboweni is going to pull out of his hat this year. Most commentators will talk about ‘bracket-creep’, sin taxes and an increase of 1% to the VAT rate. But the Minister needs to start becoming a little more creative.
Officially, for the 2019/20 financial year, government will not be increasing income taxes. The only taxes set to increase are the indirect taxes: fuel levies, excise duties on alcohol and cigarettes, and the new carbon tax coming into effect on 1 June 2019. With these increases government estimates that it will raise an additional R1.2 billion.
Ahead of the 2018 Budget Speech, Treasury’s options to raise revenue are becoming increasingly limited. Treasury will need to think outside the box this year if it is to make any meaningful difference to its current revenue shortfall, estimated to currently stand at around R50.8 billion.