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If Gordhan Wants Another R28bn, Then Tax Will Go Up — Judge Davis

'Taxes have to go up.'

20/02/2017 17:34 SAST | Updated 20/02/2017 18:45 SAST
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South African High Court Judge Dennis Davis.

Tax expert Judge Dennis Davis expects taxes to go up in Wednesday's national Budget.

Judge Davis noted that Finance Minister Pravin Gordhan said in the medium term Budget policy statement last October that he was seeking R28 billion in extra revenue. "Taxes have to go up."

Judge Davis was not at all sure where it was possible to raise taxes and said it was extremely difficult to increase VAT. "A two percent VAT increase would give you R28 billion... but that is not going to happen."

He had thought "for a long time" it might be possible to increase VAT and deliver expenditure in a redistributive fashion. "But can you deliver that without corruption taking place?"

It was also difficult to increase corporate tax, he said, given that there were collection problems as well as competition from other tax jurisdictions — like the UK and the US — where the pressure was on to reduce corporate tax, not raise it. But he could not say which tax would go up: "Your guess is as good as mine," he said.

Judge Davis is a member of the Commission of Enquiry into Tax Structure of South Africa and was a technical advisor to the Constitutional Assembly where the negotiations for South Africa's interim and final constitutions were formulated and concluded. He hosted an award winning current affairs programme "Future Imperfect" on TV between 1993-1998. He now hosts You Be The Judge on eNCA.

He led the Davis panel of experts which was appointed by then South African Reserve Bank (Sarb) governor Tito Mboweni in June 2000, which produced a report on the SARB's role in providing financial assistance to Bankorp.