from Faith Ngwenya, Acting Chief Executive of the SA Institute of Professional Accountants (SAIPA)
New Minister of Finance, David van Rooyen, being sworn in
Taking office at a time of such economic turmoil requires resilience and as wide cooperation with as many relevant stakeholders as possible.
The Minister takes over the portfolio when the public sector is in the midst of intensive engagements on enhancing the capacity of its workforce. The implementation of the recommendations of the World Bank Report on the Observance of Standards and Codes (ROSC) can also not be delayed any further.
There are many stakeholders, including the South African Institute of Professional Accountants (SAIPA), who are ready to engage with the Minister so that as a collective we can address these challenges given the short time left between now and the next National Budget announcement in February 2016.
Speculation is rife that tax increases will be announced in the February National Budget. This is against a background of many challenges including: • Illicit financial outflows - reported to be more than R50bn a year for Africa; • The possibility of a tax revolt; • Economic turmoil and a likely ratings downgrade; • Inflation; • Slow economic growth; • Expanding the tax base; • Prioritising budget spend while avoiding significant budget deficits. • The Report on Observations of Standards and Codes (ROSC) and its recommendations; • Challenges facing a number of the state owned entities.
We would like to remind the Minister that because of our hugely disproportionate tax base - with only a fraction of citizens at the high earnings threshold - aggressively increasing taxes would be the equivalent of killing the goose that lays the golden egg.
We acknowledge that the Minister wants to address equality by means of taxation but would caution that it is not taxation alone that will drive these imperatives - in the budget, we must spend within our means.