MONDAY, 2.00PM:
IT will be at least two years before provinces get the powers to levy the taxes allowed by the Constitution and strongly urged by the Financial and Fiscal Commission, because the South African Revenue Service cannot collect and distribute taxes regionally.
Originally, it was expected that legislation controlling such taxation would be in place by the end of this year, but the Katz commission has not yet submitted its assessment of the proposal. It is expected to point out SARS’s current limitations.
The Budget Council, comprising national and provincial financial heads, was briefed on the subject by Katz this last weekend, following Finance Minister Trevor Manuel’s doubts about the proposal, raised last week.
His doubts are shared by others. Pierre du Toit, of the Katz Commission, said that speaking personally, he believes taxes should continue to be collected “at the most effective point” and distributed centrally with all the appropriate checks and balances.
Du Toit said a federal taxation approach is “very good conceptually, but has no basis in reality. It would be a formula for tremendous wastage and inefficiency”.
The commission is examining two options for levying provincial taxes — a surcharge on personal income tax and a fuel levy.
Manuel is believed to be reluctant to cede to provinces powers that might allow them to threaten the 25% tax-to-GDP ratio which is the objective in government policy.