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A tax analyst with Ernest and Young have said that although there is room for government to introduce new taxes, it would be more effective if government could police current taxes.
Cameron Kotze said better policing of existing taxes will result in additional revenue to make up the shortfall expected in the budget because of dwindling SACU revenue.
He said: “Yes there is (room to introduce new taxes) but new taxes require additional skills which are under pressure at present. Better policing of existing taxes will result in additional revenue to make up for the shortfall that is expected due to reducing SACU revenue.”
Kotze added: “Better policing of existing tax legislation – non-declaration of income, income that is treated as capital in nature (and exempt from tax) by the taxpayer but which is taxable, tax on income paid to foreigners who do not declare that income to the Inland Revenue – the withholding tax on service fees paid to a non-resident should go a long way to address problems of decreased revenue.”
In addition to tax publicity campaigns to inform taxpayers about the need for paying tax, the tax analyst also suggested that tax officers should be trained to understand some of the technical issues so that taxpayers can be challenged with authority.
“Better policing of the legislation will also result taxpayers taking much more care as to what is disclosed in tax returns.”
In September last year, the Minister of Finance, Saara Kuugongelwa Amadhila announced a raft of proposals to amend tax laws with the aim of encouraging domestic value addition while at the same time deepening and diversifying the revenue base for the purpose of strengthening revenue collection.
The proposals, however, did not go down well with businesses, especially the mining community who were very vocal against them. President of the Chamber of Mines, Mark Dawe threatened at the time that if their concerns were not urgently addressed, companies would have no choice but to officially inform international stock exchanges of government’s intention to charge 15% VAT on exports and a 5% export levy.
Government eventually backed down on its proposals.
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