Sacob Uges Government To Speed Up Tax Reforms

by Amanda Banks, Tax-News.com, London

12 November 2001

The South African Chamber of Business (Sacob) chief executive officer, Kevin Wakeford, addressed parliament's budget committee last Thursday to call upon finance minister, Trevor Manuel, to push ahead with 'the tax reform process' to promote investment and stimulate economic growth and employment.

'Again Sacob urges government to reconsider the application of Capital Gains Tax and residence-based tax. This is of the utmost importance for not only private capital formation in the economy, but also with regard to foreign direct investment ... tax on savings and retirement funds should also be reconsidered to mobilise additional domestic saving which is performing badly as a percentage of GDP,' he stressed.

He pointed to planned reforms to cut corporate taxes from 40 per cent down to 30 per cent as well as to abolish the secondary tax on dividends. He claimed: 'This reform is of the utmost importance not only for private capital formation in the economy, but also with regard to foreign direct investment.'

Mr Wakeford proposed a one percentage point cut in tax rates every year for the next ten years. 'Our performance against other emerging markets with which we compete for production and capital has been mediocre,' he said. 'Our macro-economy policy framework should therefore focus on imaginative supply-side measures to unleash greater risk taking by capital and foster the required growth levels to address our unacceptable levels of unemployment and socio-economic deprivation.'

Trevor Manuel said he would incorporate tax cuts into his next budget in February and he reiterated his pledge to reduce the gap between the maximum personal tax rates and the lower effective corporate tax rate.

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