Carbon Tax Policy Paper in the Pipeline

National Treasury

National treasury has confirmed that a policy paper on carbon tax is to be produced during 2012 and included in the 2013 budget.

This was revealed during a briefing on its strategic plan to the standing committee on finance in Parliament.

Treasury also indicated that policy measures to increase private savings would also be investigated during the current year.

Over the next three years, a policy document will also be published which contains proposals on modernising the framework for inward and outward investment.

Treasury will also concentrate on exploring possible models for financing the national health insurance.

Some of the ideas under consideration include:

•    Various tax funding contributions
•    Co-payments
•    Single versus multiple payer systems

Treasury will also develop a long-term fiscal sustainability report. This will contribute towards Parliament’s oversight of the national fiscus.

In terms of public finances, treasury will undertake a review of the provincial and municipal equitable share formulae so as to “improve alignment with government objectives and address funding gaps”.

Budgeting and reporting reforms at the local government level will also be implemented.

Treasury will also monitor the implementation of the revised preferential procurement regulations.

Treasury instructions will also be issued designed to “enforce supply chain compliance and to counter fraud and corruption”.

Later, the South African Revenue Service (SARS) briefed members on its strategic plan for the next five years as well as its annual performance plan.

The commissioner, Oupa Magashula, outlined some of the steps SARS will take to improve customs and tax compliance going forward.

As regards customs compliance, SARS will:

•    Rollout the preferred trader programme
•    Improve border control
•    Place cargo and container scanners at border posts
•    Develop a customs risk screening tool

In terms of tax compliance, SARS will:

•    Improve risk management- better risk tools, administrative penalties and debt management
•    Build a “culture of fiscal citizenship” in South Africa
•    Implement the Tax Administration Act once it has been assented to

The bill was sent to the president for his signature in December 2011.

SARS also wants to shine its light on certain high risk areas.

Included in the list are:

•    Transfer pricing
•    Role of trusts in reducing tax
•    Small businesses- low tax compliance
•    Tax practitioners
•    Illegal cigarette industry
•    The clothing and textile industry
•    The construction sector- least tax compliant sector in formal economy

SARS also pointed out that an increase in the use of various financial schemes by businesses to avoid paying tax has been detected. Transfer pricing manipulations is one such method.

Taxpayer and trader records and transactions are also to be digitised.

Sabinet Cape Town Office

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