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South Africa's Finance Minister Silent Over Future Tax Cuts

by Robert Lee, Tax-News.com, London

05 July 2001


South Africa's Finance Minister, Trevor Manuel, has hinted that there may be at a reduction in the tax rate between companies and individuals in next February's Budget. But when asked to comment in the local press this week, Mr Manuel said 'you'll just have to wait until then, so all I can say is watch this space.'

He revealed that the South African Revenue Service (SARS) collected an extra R4.2 billion on top of the sum of R212.5 billion which was originally expected. The minister said he intends to continue his promise that the gains achieved by SARS would 'whatever efficiency gains there were ... would be put back into the economy through the pockets of taxpayers. For the past five years we've been able to keep that promise.'

Manuel stressed that South Africa's company tax rate was 'very low' and the personal tax rate 12 points higher. He argued that 'levelling the playing fields' was crucial and incidences where one company has been paying taxes when another one wasn't, was damaging the economy. He said that the issue of parity involved issues that 'have long-term benefits for the growth of the economy.'

The Finance Minister noted that the government's tax targets are dependent on any decisions made by the US Federal Reserve. He warned that there were many elements involved when predicting inflation targets and this has been made even more problematic because international monetary policies have experienced a major shift.

Manuel said: 'I don't want to prejudice the work being done to set a target which we indicated we would announce at the time of the Medium Term Budget Policy Statement, which will roughly be at the end of October. I think it is important that we allow that to work.'


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