Tax Indaba: parliament looks at 'creative ways' to increase tax base
The Parliament’s Standing Committee on Finance is looking at 'creative' ways to increase the tax base, including tyre and electricity levies, and is intensifying work on double taxation agreements and legislation, in the hope of discouraging multinationals from exploiting loopholes. That was the message of MP Des van Rooyen, chairman of the committee, during the recent Tax Indaba in Sandton.
The bottom line, according to Van Rooyen, is that "weak economic growth needs to be addressed by targeting infrastructure and skills development". Corruption and the role of civil society in developing legislation are other focus areas. When pressed about possible increases to VAT, Van Rooyen said government was considering changes, but he was reluctant to pursue a policy that would harass the poor.
"As economic conditions get tougher, we are left with fewer intervention options. We want to push for economic growth without alienating business and impacting on the poor, so this is a delicate balancing act. Most of the tax professionals who appear in the House assist with sectoral interests and I don't blame them for that. We are all concerned about developing a conducive environment for economic growth."
Tax is crucial for funding socio-economic programmes and meeting government objectives, Van Rooyen said. According to him, the high rate of compliance in South Africa, along with the country's taxation system being recognised by the World Bank as one of the best in the world, bodes well for the future.
The parliamentary Finance committee conducts oversight in an intensely consultative process over various financial bodies, including the National Treasury, Reserve Bank, Financial Services Board and Development Bank of Southern Africa, Van Rooyen explained. It has overseen a number of successes over the years, including the introduction of skills development and job creation levies, industrial and environmental incentives to enhance competitiveness and cross-border SACU initiatives.
A research and development program, in which 260 companies participated between 2008 and 2014, and a tax-free scheme to encourage a culture of saving had also been noteworthy. In addition, tax policy changes have led to the installation of SMME support desks in SARS offices around the country.