Progress Report from the Davis Tax Committee and Finance Minister’s comments on South Africa’s Tax system

Last week, the Davis Tax committee provided an interim report to Parliament on their inquiry into the role of the South African tax system. Judge Denis Davis referred to a study by the World Bank who positively confirmed South’s Africa’s tax system, as “progressive and pro-poor.” Davis spoke of the difficulty in “closing the inequality gap” due to “socio-economic challenges, the electricity shortage, and an inherited system of unequal distribution of wealth”.

Davis noted that although our tax system has assisted in minimising this inequality gap, it would not be able to solve all of South Africa’s problems. “There is higher tax morality when people know their money is being well spent,” he explained, expressing the need to eradicate corruption. “People need to pay their fair share, it is as simple as that,” he said, but that “You cannot keep taxing at the lower end, you just cannot… people are battling.”

At the Bureau for Economic Research Annual Conference, Minister Nhlanhla Nene referred to the Davis Tax Committee and negative feedback recently received by those individuals who are likely to be effected by the proposed changes. He noted that there is “no ad hoc approach to implementing major tax changes” and that “tax policy and tax legislation need to provide certainty to business. For this reason, tax policy needs to be boring and where new taxes come into being, like the carbon tax or mining royalty, we take a deeply consultative approach over many years before we legislate and implement the new measures.”

See https://sait.site-ym.com/news/236768/Nene-says-SA-tax-processes-are-by-necessity-boring-.html and https://sait.site-ym.com/news/236742/Current-tax-system-not-one-size-fits-all-Davis-.html for more.

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