No surprises for Budget 2008

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“As there were quite a number of big surprises in last year's budget, I'm not expecting any surprises in this year's budget”, Kemp Munnik, director, BDO Spencer Steward Tax Services. He believes smaller things will come into play as the economy is experiencing a downturn. He anticipates that the budget will provide further clarity on Secondary Tax on Companies (STCs) and also predicts an amendment to provisional tax and more anti-avoidance legislation. The tax rates on companies are not likely to change, he says.

The winners in this year's budget would once again be the individuals and low-income groups. With regard to companies Munnik is of the opinion that small businesses might experience some relief in the form of removal of red tape. But there would be no mercy for large companies.

If he could hand Trevor Manuel a wish list, the following would be priorities:
- Because of the skills shortage in the country he would like to see that qualified, skilled people are enticed back to the country by means of incentives such as tax breaks. The large shortage demands drastic measures.  Because it would be ideal for people to rather take care of themselves instead of being dependent on government for state pensions, Munnik would like to see a tax incentive when pension fund shortages are replenished. Company contributions of 10% should also be increased and linked to tax incentives.

An ongoing concern is that such a small percentage of the population is contributing to tax, shouldering a large tax burden. Another worrying factor is that not enough is being done to encourage investment through incentives such as tax relief for foreign investors.

The biggest macro economic issues worldwide are the American economy and the worldwide economy. Locally power shortages, now expected to be a fact of life for the next five years, are causing havoc in the economy.  Power supply problems in South Africa linger and could have a devastating effect on the mining and other industries.

On a lighter note he mentioned that Valentino Rossi (who is he – we need to spell it out for people who don't know, like me!) has major tax problems as he now has to pay €35 million in taxes. Apparently the Italian government finally got his address!

BDO Spencer Steward is a regional association of independent member firms of BDO International, a worldwide network of public accounting firms, called BDO Member Firms, serving international clients. Each BDO Member Firm is an independent legal entity in its own country.  In Southern Africa, BDO has member firms in South Africa, Mozambique, Namibia, Botswana, Zambia and Zimbabwe

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