Is South Africa On The Right Track?
In South Africa it’s only a month since the Government finally enacted legislation giving effect to measures announced in the 2015 Budget, and already the 2016 Budget announcement has come and gone. Often, when trying to track the progress of a particular tax announcement, you might find that that the initial budget legislation has been split into two or more separate bills, some of which might have been put out to consultation, others fast-tracked through the assembly, or shunted into the siding for consideration at some ill-defined later date. The South African law-making progress feels a bit like this sometimes. However, it’s not the finer points of parliamentary procedure in South Africa that bear close examination here, but the 2016 Budget itself. It raises taxes, by about the equivalent of USD3.25bn over the next three years, and doesn’t cut appear to cut any taxes, whilst arguably ‘hiding’ that tax increases behind the headline announcement that 2015’s income tax hikes wouldn’t be repeated. However, it may be worth giving Finance Minister Pravhin Gordhan the benefit of the doubt; he’s only been back in the job a matter of weeks, and it might take a little more time for his more cautious fiscal stance to play out. Because it was beginning to look like South Africa was at the top of a slippery fiscal slope, with spending outstripping tax revenue, the budget deficit growing and economic growth slipping. Let’s see if he can pull the country back towards safety.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look