Finance Minister Malusi Gigaba announced no new taxes in the medium term budget policy statement. However, the statement does warn that there will be new taxes announced in the February 2018 budget
The statement referred to “unspecified tax policy measures” which had already been announced in the 2016 Budget which were expected to raise an additional R15 billion in 2018/19, rising to R16 billion in 2019,20 and 17.2 billion in 2020/21.
“The details will be announced in the 2018 Budget,” said the statement, which is issued in the name of Gigaba. What the statement does report is that the initial tax increase in 2018/19 “is carried through into the following two years at the same rate as nominal GDP growth”.
There appears to be some railing back from the implementation of the national health insurance scheme. The National Treasury reports that it will seek input from the Davis Tax Committee on the feasibility of proposals to adjust the medical tax credit to fund the NHI.
One has to read between the lines. The statement refers to the fact that tax data “however, indicates that the programme (of tax credits) is well-targeted to lower and middle-income taxpayers”. It signals, perhaps, that the government is wary of reducing a scheme which advantages the poor and middle-income taxpayers.
Gigaba was cautious in his approach in the statement. He said there “is little space for tax increases in the current environment”. Any new policy proposals, or expansion of existing programmes, should address only the most effective and necessary interventions, he reported.
However, no new taxes were announced in the statement, but it has to be pointed out that the mini-budget – which economist Iraj Abedian says should really be dubbed a macro-budget because it provides public spending planning indicators over three years – is normally not the budget event where tax announcements are made.
As pledged, it is likely that February will be the tax announcement budget. It gives taxpayers a four-month respite.
At a press conference during the budget lockup of journalists, Gigaba said that no decision had been taken on which forms of tax could be increased or, indeed, how such new taxes could be collected.
Gigaba did announce that the legislation for the carbon tax had been tabled.