These taxation bills must be seen against the country’s poor economic growth levels which have resulted in lower than expected revenue collection and this has been caused by ongoing power cuts, poor rail and habour performance and of course, poor policy decisions.
In recent years, South Africa benefited from high commodity prices resulting in increased revenue collection. Sadly, however, commodity prices have fallen faster than expected and, of course, the logistics and power crisis has aggravated matters.
South Africa’s mining sector was a critical source of revenue in the recent past and played a significant role in stabilising the economy after the Covid-19 long and hard lockdown.
It is estimated, however, that Transnet’s collapse is costing the country R1 billion a day in lost economic output and billions of Rands more in potential investment. This has largely resulted in tax revenue for this year being revised downwards by a staggering R56 billion compared to February’s budget, and this trend continues over the medium term and the ACDP finds this deeply concerning.
Mining profits dropped almost R100 billion, resulting in provisional mining corporate tax collection falling by R24,6 billion or 56 per cent relative to the same period last year.
While lower commodity prices and weaker global demand have played a role, increased Eskom power cuts and Transnet’s logistics crisis must be laid squarely at the government’s door as this was preventable, was foreseeable and could have been addressed.
As far as these bills are concerned, a number of the amendments are of a highly technical nature and I will only focus on certain aspects due to time constraints.
The solar energy tax credit is in reality, a rebate, and despite significant lobbying to broaden the scope of the equipment covered by the credit, this has not been acceded to. This, the ACDP believes, is regrettable given the energy crisis facing the nation.
As far as tax administration is concerned, the ACDP is concerned and shares concerns about challenges experienced by taxpayers regarding inaccuracies from third-party data.
On the auto assessment process, we support the committee recommendations of a thorough review of this process to ensure that fairness and accuracy — particularly regarding third-party access and third-party data — is achieved.
Ongoing stakeholder engagement should be prioritised to enhance the system while safeguarding taxpayer interests.
In this regard, we also recognise the support tax incentives in promoting various sectors which encourage private investment and enhance accountability in tax exempt structures.
I thank you.