Tim Harris MP
DA Shadow Minister of Finance
Today’s presentation by South African Revenue Service (SARS) to the Standing Committee on Finance confirms the validity of the DA’s focus on economic growth and the broadening of participation in the formal economy in our “8% Policy Project”
In August, the DA will release its comprehensive plan to accelerate economic growth and ensure all South Africans have the chance to play a productive role in our economy.
SARS statistics indicate that the financial crisis cost South Africa R255bn in potential tax revenue. This tax loss is associated with the slow-down in economic growth in 2008/9 and indicates the powerful effect negative growth can have on tax revenue. But the flipside is also true: if we accelerate economic growth to around 8%, we will generate significantly more tax revenge. Today SARS agreed to provide the committee with a detailed analysis of the effect faster growth would have on tax revenue in South Africa.
Other statistics presented today show that 8% of individual taxpayers pay half of the individual tax revenue and 1% of companies pay 60% of corporate tax. These figures highlight the fragility of South Africa’s revenue base and underline the importance of growing participation in the formal economy.
They also sound a warning about the numerous potential taxes coming down the line. Carbon tax, local business tax and new taxes to fund the National Health Insurance all threaten the sustainability of our extremely narrow tax base.
The acceleration of growth and broadening of participation are the two key pillars of the DA’s 8% growth project. The numbers presented by SARS today indicate that we are on the right track.