Tax Budget Speech 2019

Photo: AdobeStock

Budget Speech 2019: Expect the rich to be hit the hardest

South Africans who fall in the upper income bracket will likely be hit the hardest when the 2019 Nation Budget Speech is delivered.

Tax Budget Speech 2019

Photo: AdobeStock

Don’t expect any major bombshells from Tito Mboweni when he delivers his maiden budget speech on Wednesday.

That’s according to Ruaan van Eeden, Managing Director, Tax Advisory at Geneva Management Group (GMG). Instead, he believes, Treasury will look to implement existing taxes more efficiently.

“I don’t think a new type of wealth tax is on the cards,” says van Eeden, “It’s too expensive to administer and the revenue to be collected will likely be immaterial in the bigger scheme to really make an impact”.

What’s more likely to happen, he believes, is that Treasury will take a targeted approach to things like the estate duty, transfer duty at the higher end of the market and donations tax where they feel there might be a little more wiggle room for increases.

Given last year’s increase, van Eeden states that it is unlikely that we’ll see an increase in the standard rate of VAT.

“We may, however, see marginal increases on the fuel levy and excise duties,” van Eeden points out. “It’ll also be interesting to see whether the success of the sugar tax as a revenue generator, may push government to pursue further levies aimed at behavioral change”.

Van Eeden also expects Mboweni’s address to include a strong focus on increased enforcement and transfer pricing.

Ultimately, van Eeden points out, most of the increases will impact high net-worth individuals (HNWIs).