Van Rooyen warned not to squeeze taxpayers

Cape Town – In an open letter to new Finance Minister David van Rooyen the SA Institute of Professional Accountants (Saipa) reminded the minister to be wary of “killing the goose that lays the golden egg”.

Saipa acting chief executive Faith Ngwenya was referring to SA’s hugely disproportionate tax base where only a fraction of citizens were at the high earnings threshold.

“Aggressively increasing taxes would be the equivalent of killing the goose that lays the golden egg,” Ngwenya wrote.

The relatively unknown ANC MP David Van Rooyen was sworn in on Thursday as a replacement for Nhlanhla Nene, who was abruptly removed from his post on Wednesday evening by President Jacob Zuma.

In her open letter to Van Rooyen on behalf of Saipa, Ngwenya wrote:

“Taking office at a time of such economic turmoil requires resilience and as wide cooperation with as many relevant stakeholders as possible.

"The Minister takes over the portfolio when the public sector is in the midst of intensive engagements on enhancing the capacity of its workforce.

"The implementation of the recommendations of the World Bank Report on the Observance of Standards and Codes can also not be delayed any further.

"There are many stakeholders, including the Saipa, who are ready to engage with the Minister so that as a collective we can address these challenges given the short time left between now and the next National Budget announcement in February 2016.

"Speculation is rife that tax increases will be announced in the February National Budget. This is against a background of many challenges including:

• Illicit financial outflows - reported to be more than R50bn a year for Africa;
• The possibility of a tax revolt;
• Economic turmoil and a likely ratings downgrade;
• Inflation;
• Slow economic growth;
• Expanding the tax base;
• Prioritising budget spend while avoiding significant budget deficits.
• The Report on Observations of Standards and Codes and its recommendations;
• Challenges facing a number of the state owned entities.

READ: Outa warns of tax revolt against Zuma

"We acknowledge that the Minister wants to address equality by means of taxation but would caution that it is not taxation alone that will drive these imperatives - in the budget, we must spend within our means."