Rates Bill to meet growth

Pravin Gordhan

Pravin Gordhan

Pretoria – Finance Minister Pravin Gordhan on Tuesday tabled the Rates and Monetary Amounts and Amendment of Revenue Laws Bill in Parliament, which he said would go a long way towards helping government fulfil its growth priorities and provide support for job creation.

“The tax bill contains a carefully developed package which supports government’s objective to maintaining fiscal revenues for government priorities, provides for fiscal support for growth and job creation and strives for fiscal consolidation in the medium term. This is what is required at a time of on-going global economic uncertainty,” he said.

“We want to assure our taxpayers that we continue daily to ensure that your money is spent well and we obtain value for money and minimise wastage.”

The bill contains changes to tax rates, thresholds, credits and the latest excise levies on alcohol and tobacco. The bill follows on the recent national budget.

It introduces changes to dividend tax, which replaces secondary tax on companies as of 1 April. An important benefit of the new dividends tax is that it will properly separate the tax from company financials because dividends declared by companies better represent shareholder profits.

Another added benefit is that it will allow pension funds to receive tax-free dividends, thereby allowing for greater pension fund growth.

Comments by critics, that the proposed increased rates associated with dividends tax and capital gains tax will unfairly target savings to the detriment of lower and middle income earners, had been noted, said Gordhan.

“What these commentators fail to recognise is that the new Dividends Tax will cost the fiscus R1.9 billion because the new regime contains many new exemptions, including the exemption for pension funds,” he said, adding that in order for these funds to be replaced, it was necessary to raise dividends tax rate to 15%.

“Let me emphasise that relief from increased capital gains rates is again being made available for lower- and middle-income groups so that their savings can be shielded from this change.”

Views that the budget contained significant overall increases in the tax burden were untrue, he said.

The budget review expects the aggregate tax burden to rise marginally from 24.7% to 25% of GDP in 2011/12 and 2012/13 respectively.

On the issue of toll roads, suggestions to earmark fuel levies against toll roads only will entail an increase in the tax of nearly R1 per litre, warned Gordhan.

“Those asking for the earmarking of the general fuel levy should be careful what they wish for. The total funds spent on roads and public transport is more than what is collected from the general fuel levy,” said the minister.

For the 2012/13 fiscal year, government has virtually doubled the amount budgeted for roads and transport to over R70 billion, while gross expected revenue from the general fuel levy is about R42.8 billion.

The public has been asked to send their comments on the bill to Treasury before 31 March 2012.