Cape Town - Despite moderate economic growth, tax revenues have remained buoyant over the past year, Finance Minister Pravin Gordhan said on Wednesday.
“In 2013/14, we will collect R899 billion. This is R1bn more than we projected last February, and R4bn above the estimate presented at the time of the 2013 Medium-Term Budget Policy Statement,” he told the National Assembly in his 2014/15 budget speech.
For the first time since the recession, corporate income tax revenues would exceed the 2008/9 peak of R165bn.
Gordhan said that in 1994, tax revenue amounted to R114bn.
Revenue collected next year would exceed R1 trillion.
This was nearly a tenfold increase in nominal terms.
This was achieved while reducing the tax rate for companies from 40 percent, in 1994, to 28 percent, and the top marginal rate for individuals from 45 percent, in 1995, to 40 percent, he said.
During this period, the contribution of corporate income tax as a proportion of total revenue had nearly doubled.
“We have also improved the fairness of the tax system by taxing residents on their worldwide income and taxing capital gains.”
These changes had brought the South African tax system more in line with international principles and had substantially broadened the tax base.
The main tax proposals for the 2014 Budget included personal income tax relief of R9.25bn.
About 40 percent of the relief went to South Africans earning below R250,000 a year.
The tax-free, lump-sum amount paid out of retirement funds would be increased from R315,000 to R500,000, benefiting especially lower income members who did not benefit from deductible contributions.
Excise duties on alcoholic beverages and tobacco products would increase by nine cents per 340ml can of beer and 68 cents a packet of 20 cigarettes.
The price of whisky would increase by R4.80 a bottle.
These increases took effect immediately.
“In recognition of recent increases in the imported cost of fuel, the general fuel levy increase is limited to an inflation-related 12 cents per litre on 2 April 2014, and the Road Accident Fund levy will increase by eight cents per litre,” he said.
Legislation to allow for tax-exempt savings accounts would proceed this year to encourage household savings.
Complementing this tax reform, a new top-up retail savings bond would be introduced by the National Treasury this year, allowing for regular deposits into a government retail bond.
It would also be accessible to community savings groups, such as stokvels. Options for introducing a sukuk retail savings bond were also being explored.
The Income Tax Act currently required philanthropic foundations to distribute 75 percent of the money they generated within a year.
This requirement was unduly restrictive and would be relaxed, while ensuring that accumulated capital was distributed to worthy causes within a reasonable period.
Regulatory and other measures had been put in place to address the environmental consequences of acid mine drainage.
“To complement current efforts and ensure that the mining sector makes its fair contribution towards continuing acid mine drainage expenses, consultations will be initiated on an appropriate funding mechanism,” he said.
Following public consultation, the Treasury and the environmental affairs department had agreed that a package of measures was needed to address climate change and to reduce emissions.
This would include the proposed carbon tax, environmental regulations, renewable energy projects and other targeted support programmes.
To allow for further consultation, implementation of the carbon tax was postponed by a year to 2016.
Gordhan said reforms to the tax treatment of risk business for long-term insurers were also proposed.
Profits from the risk business of a long-term insurer would be taxed in the corporate fund, similar to the way short-term insurers were taxed.
The first recommendation of the tax review committee -- headed by Judge Dennis Davis and appointed last year to make recommendations for possible reforms -- related to small and medium enterprises.
These proposals were taken forward in this budget.
The committee had also started working on base erosion and profit shifting -- trends that were under scrutiny internationally.
During 2014, work would be undertaken on the impact of the tax system on economic growth and job creation, and aspects of VAT, mining taxes and estate duties.
On tax administration, Gordhan said that in the past five years, the tax register of individuals grew from 5.5 million to over 15m to include all known economically-active individuals.
Companies on the tax register now stood at more than 2.3m.
The number of employers registered for pay-as-you-earn was nearly 404,000.
In the next fiscal year, the SA Revenue Service would implement single registration of taxpayers and traders for the main taxes.
SARS was already working closely with other government agencies to share non-confidential electronic data.
“Without compromising privacy and confidentiality, this will contribute to reducing identity fraud, lower administration costs and enhance compliance,” he said.
New global tax policies were being devised to counter harmful tax practices, and treaties were being designed to allow for the automatic exchange of information.
SARS currently chaired the 121-country Global Forum for the Exchange of Information for Tax Purposes.
Since the Tax Administration Act came into effect, SARS had recognised 11 bodies to which tax practitioners had to belong, and 15,000 tax practitioners were now registered with them.
Taxpayers were advised to only use tax practitioners recognised by SARS.
Over the past two years, the voluntary disclosure programme had realised almost R5bn from income that was not previously declared, he said. - Sapa