South African Treasury Says Income Tax Surcharge 'Not Feasible'

by Robert Lee, Tax-News.com, London

31 August 2001

The South Africa Treasury chief director for intergovernmental relations, Ismail Momoniat, has dismissed the possibility of allowing provinces access to personal income taxes as 'just not feasible', it was revealed recently.

The dismissal came as Mr Momoniat was briefing members of the Parliament's finance portfolio committee on the Provincial Tax Regulation Bill, which was tabled in Parliament on Wednesday. It is expected that the bill, if approved, will give South African provincial authorities the power to levy certain taxes and duties, but that these will not include income taxes, general sales taxes, VAT, property taxes, and customs duties.

The bill will also give provinces the right to impose a flat rate surcharge on the tax bases of certain taxes, and does not specifically prohibit the imposition of a surcharge on personal income tax, which creates a little room to manouevre for the provincial authorities. However, the Treasury department has stipulated that a province will be required to submit a detailed proposal to the Finance Minister 10 months before the start of the fiscal year in order to be permitted to include a specific tax in its budget.

This is because the government is anxious to guard against the possibility of provinces imposing taxes which are not in the national interest, or prejudicing economic activities across provincial boundaries.

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