The Congress of South African Trade Unions (COSATU) has called for tax increases to fortify South Africa’s fiscal position.

In a submission to Parliament on the 2019 Adjustments Appropriation Bill, the union federation called for tax increases on ‘wealthy companies’ and higher-income individuals, as well as taxes on inheritance, land and dividends, and higher rates of VAT on luxury goods and customs duties on certain imports.

It argued that raising taxes on businesses to between 30% and 32% would add between R13 billion and R25 billion to the tax take. Raising capital gains tax and income taxes on those earning more than R1 million a year to 45% in each case would generate another R4 billion and R5 billion respectively.

Cosatu also called for a ‘solidarity tax’, which it said would counter inequality by reducing income growth among the top 10% of earners, and increasing it among the bottom 10%.

Tax credits could be used to stimulate local manufacturing and procurement.

South Africa is facing an increasingly difficult fiscal situation. In his medium-term budget policy statement (MTBPS) in October, Finance Minister Tito Mboweni indicated that South Africa was on course for a R53 billion revenue collection shortfall this year.

This is alongside anaemic growth, enormous debts incurred by the country’s state-owned enterprises and the extensive expenditure growth that would result from the proposed National Health Insurance system.

Tax increases or new levies are a distinct possibility in the next financial year (and possibly in years to follow), while government has mooted the possibility of instituting prescribed assets to compel investors to put money into projects and institutions of its choice.

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