An increase in sin taxes and the fuel levy are predicted in this month’s Budget speech, according to a tax expert at financial services firm Deloitte.
”In line with prior years, we expect inflationary increases on most alcoholic beverages, with low increases on traditional African beer [sorghum beer],” said Duane Newman in a statement.
”We also expect large increases in the excise duty on cigarettes to increase their cost and to reduce people’s propensity to smoke and burden the medical system.”
Newman also predicted inflationary increases on the fuel levy on petroleum products.
As the Critical Infrastructure Programme is a key focus for government, Newman said it should receive special attention in the Budget.
”As this grant results in a joint venture between government and the private sector, we believe that this Budget allocation should be increased substantially.”
Commenting on the government incentives to promote particular economic activities, Newman said they would like to see substantial increases to the money allocated to the Strategic Industrial Projects (SIP).
Initially, R3-billion was allocated to the SIP incentive package in the form of tax allowances intended to lower the cost of investing in key industrial projects in South Africa.
”We believe that this has been government’s most successful programme of recent years, but it is coming to an end on two counts. Firstly, the last date for submission of applications is July 31, 2005, so if government wish the programme to continue, this date needs to be amended in the Act.
”Secondly, the initial budgeted amount of R10-billion has been exhausted and we recommend that this be significantly increased [doubled, or at least a 50% increase] or that this cap be removed all together.”
Another capital incentive, the Small Medium Enterprise Development Programme, had not been as successful.
”The programme has been fraught with administrative bungles, including extremely slow processing times, budget constraints, victimisation, and lack of clarity on rules and criteria for approval,” Newman said.
Deloitte called for an extension to the programme, which pays a grant to local and foreign investors who start new businesses or expand their current operations in specified sectors. – Sapa