2018 NATIONAL BUDGET TIPS
16 Feb 2018
Whilst there remains uncertainty about the composition of the new cabinet of President Ramaphosa, there is far less uncertainty about the fact that the country’s Budget Speech will be delivered on Wednesday, 21 February 2018.
The country needs decisive leadership at this time and even if there is unease still at the change in the Minister of Finance, the necessary leadership needs to be displayed or else the gains that the country has seen since the December election of Cyril Ramaphosa as President of the ANC will have been wasted.
The country cannot afford to continue spending more money than that collected by taxes.
A lot of time is given to setting budgets but the problem is the control to ensure that agreed upon budgets are met and that expenditure is in fact limited to the budget and spent on the budgeted items and not on unbudgeted expenditure.
We do not have sufficient controls in place as a country (and as a municipality) and the level of censure for exceeding a budget and spending unbudgeted expenditure, or even frivolous expenditure, is not in place to stop its continued recurrence.
The glib use of the term “unauthorised expenditure” in many audits of State Bodies, and the fact that little or no punitive action against departments or guilty officials seems to follow from this, is of great concern to taxpayers. Unless the guilty parties are held accountable for irregular expenditure and wasting State resources, this practice will simply continue.
At the time of the Katz Commission I proposed that taxpayers be given a single tax number that was based on their ID number so that the completeness of the tax base could be looked at. One could for example test the people aged between 35 and 55 who were not reflecting any taxable income. For too many years we have heard about a tax gap due to non-disclosure but other than the Voluntary Disclosure Programmes there does not seem to be any real evidence of this being addressed. Whilst revenue will benefit from the worldwide disclosures of information from Banks and other financial institutions, we need to do more to close the local tax gap.
It is probable that in order to fund the promises made by President Zuma on the eve of the ANC Elective Conference that the Minister is going to have to give consideration to either increasing the VAT rate or the Skills Development Levy or a combination of both of these.
It is also probable that bracket creep will raise a significant amount of tax from the middle class.
In order to mitigate against the impact that this will have on the middle class, it is important for the Minister to give consideration to the introduction of a limited tax deduction for the cost of private security and education in the same manner that the Minister provides a limited deduction for the cost of the medical aid on the basis that the State is unable to provide adequate medical facilities, schools and policing, which require the private sector to pay in addition to their taxes, amounts for medical aid, security and education.
Mister Minister please spend wisely, do not spend more than we have, spend locally to ensure that government spend benefits our economy and above all please minimise the wasted expenditure by implementing the necessary controls.
Mister Minister you have hard choices to make this year.
Tel: 031 573 5000