A look at the new proposed taxes for South Africa

Government’s Financial and Fiscal Commission has proposed a number of new ‘local government’ taxes to help address some of the financial issues facing the country’s municipalities.

In a proposal document, published at the end of March, the commission indicates that some of these taxes will be aimed at property owners and included as part of a utilities bill.

The commission also indicates that some of these taxes are commonplace internationally, having been deployed in cities such as New York, Barcelona and Paris.

It specifically drew attention to the following forms of taxation, which it believes could be implemented successfully at a local government level:

  • Development charges;
  • Weigh in bridges in mining areas;
  • Advertisement levies;
  • Fire levies;
  • Amusement taxes;
  • Hotel taxes.

“Local governments across the globe also impose a mix of small levies, such as advertisement taxes, hotel/occupancy taxes, fire and drought levies, amusement taxes or construction taxes,” the commission said.

“Hotel or occupancy fees and tourism fees often assume a value-added sales tax on the hotel bill. Amusement taxes and advertisement taxes are charged on admission to amusement parks and on the use of signboards, respectively.”

The commission explained that a fire service fee is a levy often imposed on contracts of insurance or added to property rates.

“In the former case, it is only paid by those who insure their properties while in the latter case, it is paid by all ratepayers.

“These taxes generate little revenue due to the seasonality of the services being taxed. For rural municipalities, tourism levies can be a significant source of income, while urban municipalities benefit from advertisement, hotel and construction taxes.”

Wealth tax

It should be noted that the above proposals are not official government policy and are primarily aimed at a local government level.

However, the government has indicated that it is looking at more substantial changes at a national level – including the possible introduction of a wealth tax.

Chief director Edgar Sishi says the National Treasury is considering a number of new tax measures as government seeks to raise an additional R40 billion through hikes in the coming years.

Presenting in a virtual parliamentary meeting on 3 July, Sishi said that Treasury was considering research reports from the Davis Tax Committee on the possible introduction of new measures, including the viability of a wealth tax and how it relates to a land tax and estate duty.

“We are looking at these recommendations. It is important to remember that tax amendments over the last five years have included some of these proposals and we are looking at additional proposals for the 2021 budget.”

Read: SARS is making major changes to the tax season – here’s what you need to double-check and have in order before August

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