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20 Jan 2009 14:12
The national budget for 2009/10, due to be announced on February 11, will hold “more of the same” for the average person, Ernst & Young said on Tuesday.
“It’ll be a non-event budget for the average person with no surprises or upheavals,” said director Corlie Hazell.
She based her forecast on previous pre-election budgets.
However, Graham Thompson, financial services analyst at Ernst & Young, said the average person may not get as much tax relief as expected.
“The government might be hard-pressed when it comes to relief as revenue collections are going to slow,” Thompson said.
“And the sin taxes will go up as they usually do—but this year they could go up with just a bit more force,” Thompson said.
The 2010/11 budget would probably provide more for the average person, as it was expected to introduce a broad-based social security system, including retirement savings, unemployment benefits, disability and death benefits for the formally employed.
Thompson pointed out that while the government received a large portion of its revenue from the corporate sector—and while this amount had increased considerably over the years—the individual still contributed the most.
In the 2008/09 budget, corporates contributed 28% of revenue while contributions of individuals came in at 31%.
Asked what would be a welcome surprise for Ernst & Young in this year’s budget, Hazell said that a cut in corporate tax rates would be welcome.
“It happened last year and it would be a welcome surprise if it happened again this year,” she said.
Corporate tax rates have been reduced in South Africa over the past five years, and this was in line with best economic practice globally.
She added that corporates had to make sure that their houses were in order so that should the South African Revenue Services have any queries, the corporates would be in a position to quickly provide the information.
“Tough penalties have now been introduced for corporates,” Hazell added.
Charles MacKenzie, director at Ernst & Young, said that presently corporates considered their reputation when it came to tax and would not be involved in anything that might be considered “less than patriotic”.—Sapa
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