South Africa Can't Afford BIG, Says Manuel

by Lorys Charalambous, Tax-News.com, Cyprus

24 May 2005

Launching South Africa's annual tax filing season yesterday, Finance Minister Trevor Manuel said that the design of the proposed basic income grant (BIG) was "fundamentally flawed."

Speaking at the launch in Cape Town of the 2005/6 tax filing season, he said there was no country in the world that had been able to implement it. "If it works, it works because it's a simple system," he said, adding that a BIG (much touted recently in South Africa as a way of dealing with poverty) would cost approximately R89bn, including a "horrendous" amount of money for administration costs. "It's too big a risk... the country can't afford it," he said.

SA would do much better if it focused on finding ways of relief targeted only at really poor people, said Mr Manuel, with an administration system that eliminated the possibility of corruption.

SARS is encouraging the country's R4.5m taxpayers, including 2.4m individuals, to get their returns in by July 8. "It's important that we recognise the role that tax plays in providing democracy to all citizens, and that it's a good and necessary thing," said Mr Manuel

In 2004, almost 2 million tax returns were filed, double the number filed in 2003, due to improved collection methods and a widening of the tax base. Gross tax revenues reached R345 billion in the 2004 fiscal year, R11 billion ahead of target. The collections goal for 2005/2006 has been raised to R372 bn, with spending estimated to be R418 bn.

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