Budget 2010 survey results

Thank you to all who participated in our recent pre-budget survey! Now you can see if you your wishes have come true?
Q1 – Should personal taxes be increased given the expected shortfall in revenue collections?
Yes – 6%
No – 94%
Participants continue to have things their way as far as personal taxes are concerned. However, there is a sting in the tail. Minister Gordhan announced that taxes may have to be raised in the future to fund spending commitments. Key to avoiding possible increases in personal taxes in the 2011 or 2012 budgets will be how quickly the economy in general, and corporate profits in particular, recover.

Q2 - Is a social security tax viable in South Africa?
Yes – 16%
No – 84%
The budget provided little information on social security reform, other than indicating that this year a ministerial committee will give consideration to the design standards of a default basic retirement saving and income protection scheme. Minister Gordhan also revealed that the timeframe for the introduction of national health insurance has been extended to five years to allow for the research of measures for a ‘feasible transition’. Thankfully, the minister will be ‘assessing the fiscal and financial implications’ of these projects.

Q3 - Should South Africa introduce group tax?
Yes – 57%
No – 43%
As expected, no announcements were made in this regard. Unfortunately, there is some concern that the rather vague and cryptic reference to transfer pricing in the announcements on the closure of tax loopholes relates to the extension of transfer pricing to local transactions in addition to cross-border transactions. If this is the case, this is a step away from group taxation rather than towards it.

Q4 - Should there be more environmental taxes?
Yes – 63%
No – 37%
As expected, there were a number of pronouncements on environmental taxes. The previously announced ad valorem CO2 vehicle emissions tax that was due to come into effect on 1 March 2010 is to be converted to a flat-rate tax based on emissions over a predetermined level of 120g/km at a rate of R75 per g/km and is to be postponed to 1 September 2010. It was also announced that two discussion documents would be published for comment during the year: the first on a comprehensive carbon tax and the second on emissions trading. We expect that South Africa will implement a comprehensive carbon tax within the next two-three years. It was also announced that a number of other environmental taxes and charges are to be investigated. These take the form of a waste water discharge levy, pollution charges, waste stream levies, landfill tax and traffic congestion charges.