Latest news with #ValueAddedTax
IOL News
10 hours ago
- Business
- IOL News
Reserve Bank's interest rate cut: response to low inflation and economic challenges
The South African Reserve Bank has lowered interest rates in response to a low inflation rate, but experts warn that rising taxes could still burden households. This article explores the implications of the rate cut and the ongoing economic challenges facing South Africa." Image: File The low inflation rate was the driver behind the South African Reserve Bank (Sarb) Governor Lesetja Kganyago lowering interest rates this past week. Kganyago announced that the central bank's Monetary Policy Committee (MPC) voted to decrease the repo rate from 7.50% to 7.25%. This means that the prime lending rate in South Africa has been lowered from 11% to 10.75%. Frank Blackmore, Lead Economist at KPMG told Business Report that the reason for this was the low inflation rate. Blackmore said, "The Reserve Bank remains data dependent in that respect, as well as the easing of some of the risks such as the exchange rate. Appreciation from the highs over R19, back down to around R18 to the dollar level and as well as the oil prices, which have remained low at this point. They have also taken into consideration that the Value Added Tax (VAT) hike will not take place, also eases future inflation in that respect." "An interesting analysis was also done by the MPC regarding an upside risk scenario if things worked in the other direction and South Africa would face a kind of stagflation scenario including weak economic growth and tight monetary policy reacting to higher levels of inflation, all caused by perhaps, the trade wars that are currently ongoing globally. Probably more interestingly another scenario where they're reducing the target rate from a current 4 1/2% objective, so the midpoint of the three to 6% range to the 3% objective so the bottom of their three to 6% range. This puts us closer in line with many of our trade partners as well as being closer to the median emerging market rate of around 3%," the economist said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading "In this situation, the benefits would also fall to all South Africans meaning that lower inflation would preserve the value of the earnings and wealth in future periods. Given the low inflation that we are currently experiencing this would be the right time to institute such a change," Blackmore further added. Neil Roets, CEO of Debt Rescue, told Business Report that the announcement of a BPS cut to the repo rate may be good news for economists, but will not shield South Africans from the burden of the fuel and sin tax levies that have been introduced by Finance Minister Enoch Godongwana within his Budget 3.0 projection. Roets warned that increased taxing of the workforce is not the answer, referring to the fuel-tax levy and raising sin taxes even higher, and will put further financial strain on households, driving them to new depths of despair. "This, at a time when they are buckling under the weight of multiple unsustainable inflation-related living costs. The reality is that the Finance minister's decision to impose new tax measures will hurt lower-income families most, as they will bear a proportionally higher burden, thus forcing them to make impossible lifestyle choices with the little disposable income they have left,' Roets said. Roets said that Kganyago is a longstanding advocate of shifting to a lower inflation target, arguing this would make the nation better placed to compete with its trading partners. 'A single-point target of 3% would be in line with South Africa's peers and lead to lower interest rates in the long term,' he has previously said. "His critics worry that reaching a lower inflation target would require tighter monetary policy however, that would cost growth and employment in a country with one of the highest jobless and poverty rates on earth. The Governor reiterated his view saying that the MPC is of the view that the 3% scenario is more attractive than the 4.5% baseline, and they would like to see inflation expectations move lower, towards the bottom end of their target range. He also said the MPC will consider scenarios with a 3% objective at future meetings," Roets said. A lower inflation target risks scuppering further interest rate cuts this year too, Investec Chief Economist, Annabel Bishop warned Bishop said, 'With a change to the inflation target reportedly occurring soon this year, the Sarb has chosen to cut interest rates this month to avoid the limitation of doing so in the future, but then could easily be at risk of needing to reverse the cut.' 'The reality is that the slow pace of the country's repo rate reductions is perpetuating the debt trap that millions of ordinary South Africans find themselves in, leaving millions with no option but to survive on credit,' Roets further said.
Business Recorder
3 days ago
- Business
- Business Recorder
Solar panels: Pakistan govt mulling withdrawing ST exemption
ISLAMABAD: Chairman Federal Board of Revenue (FBR) Rashid Mahmood said Thursday that the government is examining a proposal to withdraw sales tax exemption on solar panels in budget (2025-26). FBR Chairman was responding to a query of a member of the Senate Standing Committee on Finance during meeting held at the Parliament House. He stated that the FBR is working on proposals to withdraw all kinds of tax exemption including exemption available on the import of solar panels. Cabinet halts additional tax on solar power users Meanwhile, during another meeting of the National Assembly Standing Committee on Finance, the representatives of Refineries briefed the committee that their input was taxed, but on output, there was no GST, causing problems over the last several years. Without resolving this issue, they would not be able to invest $6 billion. The Chairman FBR, Rashid Mahmood Langrial, said that their business came out of the ambit of the Value Added Tax (VAT) when there was no tax on their output. He said that there were proposals under consideration to impose sales tax on their output or provide them some kind of other permanent solutions. Chairman FBR has also assured the committee that he will inquire into the matter of recovering over Rs 80 million amounts from KababJee restaurant Karachi. Member of committee Mirza Ikhtiar Baig raised the issue before the finance committee chaired by Nafeesa Shah. He informed that FBR has recovered more than Rs 80 million from accounts of this restaurant without giving any chance of hearing in different forums. He has no money to pay salaried and owner of the restaurant has threatened to commit suicide. The business community is pressing me for this harassment by the FBR, Baig added. The FBR Chairman replied that I did not have knowledge of this particular case. I will update the committee after inquiring about the matter from the relevant field office of FBR. The committee considered 'The Income Tax (Second Amendment) Bill, 2025'. The Committee expressed concern over the second proviso of the newly inserted clause (3A). The Secretary Revenue assured the Committee that the concerns of the Hon. Members would be addressed and that the words 'and shall cease to have effect after tax year 2025' would be deleted. Upon the assurance given by the Secretary Revenue, the Committee recommended that the Bill, as amended, may be passed by the Assembly. The Committee considered Starred Question No. 38, moved by Aliya Kamran, MNA, regarding the imposition of Section 99D of the Income Tax Ordinance, 2001, and Starred Question No. 40, moved by Sharmila Sahiba Faruqui Hashaam, MNA, regarding the recent policy shift prioritizing digital currencies, without adequately addressing their regulatory deficiencies. After a detailed discussion the Committee decided to defer both agenda items for discussion in the next meeting of the Committee. The report on the 'non-implementation of minimum wages, as announced by the Federal Government in its departments', a matter raised by Syed Rafiullah, MNA and referred by the Honourable Speaker, was also deferred due to the absence of the mover. Copyright Business Recorder, 2025
Business Recorder
3 days ago
- Business
- Business Recorder
Solar panels: Govt mulling withdrawing ST exemption
ISLAMABAD: Chairman Federal Board of Revenue (FBR) Rashid Mahmood said Thursday that the government is examining a proposal to withdraw sales tax exemption on solar panels in budget (2025-26). FBR Chairman was responding to a query of a member of the Senate Standing Committee on Finance during meeting held at the Parliament House. He stated that the FBR is working on proposals to withdraw all kinds of tax exemption including exemption available on the import of solar panels. Cabinet halts additional tax on solar power users Meanwhile, during another meeting of the National Assembly Standing Committee on Finance, the representatives of Refineries briefed the committee that their input was taxed, but on output, there was no GST, causing problems over the last several years. Without resolving this issue, they would not be able to invest $6 billion. The Chairman FBR, Rashid Mahmood Langrial, said that their business came out of the ambit of the Value Added Tax (VAT) when there was no tax on their output. He said that there were proposals under consideration to impose sales tax on their output or provide them some kind of other permanent solutions. Chairman FBR has also assured the committee that he will inquire into the matter of recovering over Rs 80 million amounts from KababJee restaurant Karachi. Member of committee Mirza Ikhtiar Baig raised the issue before the finance committee chaired by Nafeesa Shah. He informed that FBR has recovered more than Rs 80 million from accounts of this restaurant without giving any chance of hearing in different forums. He has no money to pay salaried and owner of the restaurant has threatened to commit suicide. The business community is pressing me for this harassment by the FBR, Baig added. The FBR Chairman replied that I did not have knowledge of this particular case. I will update the committee after inquiring about the matter from the relevant field office of FBR. The committee considered 'The Income Tax (Second Amendment) Bill, 2025'. The Committee expressed concern over the second proviso of the newly inserted clause (3A). The Secretary Revenue assured the Committee that the concerns of the Hon. Members would be addressed and that the words 'and shall cease to have effect after tax year 2025' would be deleted. Upon the assurance given by the Secretary Revenue, the Committee recommended that the Bill, as amended, may be passed by the Assembly. The Committee considered Starred Question No. 38, moved by Aliya Kamran, MNA, regarding the imposition of Section 99D of the Income Tax Ordinance, 2001, and Starred Question No. 40, moved by Sharmila Sahiba Faruqui Hashaam, MNA, regarding the recent policy shift prioritizing digital currencies, without adequately addressing their regulatory deficiencies. After a detailed discussion the Committee decided to defer both agenda items for discussion in the next meeting of the Committee. The report on the 'non-implementation of minimum wages, as announced by the Federal Government in its departments', a matter raised by Syed Rafiullah, MNA and referred by the Honourable Speaker, was also deferred due to the absence of the mover. Copyright Business Recorder, 2025
The Hill
24-05-2025
- Business
- The Hill
Trump's tariffs seek to restore American exceptionalism
In response to duties imposed on foreign goods by the U.S. government, a leading international publication called out the U.S. policy, predicting that political and economic upheaval would follow. That dire prediction — made by The London Standard in 1896 (at that time known as The Standard) — did not quite pan out. Instead, the U.S. economy enjoyed a renaissance, ushering in an era of financial prosperity that has continued to this day. Although today's financial dynamics differ from those of that time, one core principle has remained the same — a fundamental reality that entwines President William McKinley's philosophy with that of President Trump. That is American exceptionalism — the idea that the American people are capable of so much more than what the naysayers believe of them. Since free trade began in earnest during the 1990s with NAFTA, this aspect of U.S. economics became a sort of holy grail for politicians. The allure of cheap goods was deemed too great to tamper with. It wasn't something to be questioned, from the left or the right — so much so, that many people didn't even know that American companies were competing at a steep disadvantage overseas. However, although they may not have known it, many Americans were feeling it. Millions of Americans in flyover regions were hurt by the rapid deindustrialization caused by these agreements. U.S. companies had their growth stunted by unfair trade practices that were being employed against them. And the fact that those practices were in place is indisputable. Economists can perhaps explain away trade deficits as normal economic activity (in some cases), but not trade barriers harming American companies. Charging a tariff ten times what the U.S. charged on cars (China), non-acceptance of U.S. safety standards for automobiles (Japan and South Korea), and the Value Added Tax, in which foreign products were able to retail at a significant discount over their American counterparts, were all part of a systematic squeeze on U.S. companies competing in foreign markets. It was the outcome of other nations taking advantage of American politicians looking the other way. The system may have been working, but it certainly wasn't thriving. As the sole superpower in a rapidly expanding global economy, the past decades represented a chance for the U.S. to corner the market, to solidify its dominance and grow its prosperity. Instead, it satisfied itself with mediocrity, settling for limited growth in exchange for cheap imports. Trump set out to change that — to throw off the shackles of American defeatism, and to recapture the magic of American exceptionalism. He recognized our enormous financial advantage of more than $10 trillion in nominal gross domestic product — and that is only over our closest competitor, China. His business instincts realized that we were squandering one of our greatest national assets, our economic leverage, instead being exploited by friend and foe alike. Free trade had become free for everyone except the U.S. Disrupting a system can come at a cost, and it is fair for there to be a discussion as to how best to do it. But it must be done. Because while we can get by without this, the economy can chug along without this drastic change, that isn't the American way. We didn't win World War II, send a man to the moon and emerge as the world's sole superpower simply by getting by, just by being good enough. We did it by being exceptional. And that should be the standard we continue to strive for. With the first trade deal of this tariff era now taking shape, American exceptionalism appears to be within reach once again. The agreement with the U.K. promises to open new markets to American goods, create a fair playing field for American companies competing in Great Britain, and increase British investment on American shores. This is more than a simple trade pact; it is the first step into a new age of American opportunity and prosperity. As President Trump puts it, 'our best days are yet to come.' Let's hope his words prove true as his trade policies usher in yet another great American century. Menachem Spiegel is an author and yeshiva student. His work has been featured in the Wall Street Journal's Future View, The Star-Ledger and The Jerusalem Post.
IOL News
22-05-2025
- Business
- IOL News
SANTACO raises alarm over fuel levy hike's impact on taxi industry profits
The South African National Taxi Council (SANTACO) has raised concern Image: Armand Hough/Independent Newspapers The South African National Taxi Council (SANTACO) has expressed serious concerns that the recently announced fuel levy increase by Finance Minister Enoch Godongwana could significantly harm the profitability of the taxi industry. During his budget speech on Wednesday, the minister announced the first fuel levy hike in three years, with petrol set to increase by 16 cents per litre and diesel by 15 cents per litre. 'The budget proposes an inflation-linked increase to the general fuel levy for the 2025 fiscal year. This is the only new tax proposal that I'm announcing,' Godongwana said. IOL previously reported that while the business community welcomed the minister's reversal of the controversial Value Added Tax (VAT) proposal, they also expressed concern over the fuel levy's potential knock-on effects and the long-term fiscal risks it may pose. SANTACO's Western Cape spokesperson Mandla Hermanus said the proposed fuel levy increase will harm the taxi industry. The taxi industry plays a significant role in South Africa's public transport system, transporting over 60% of daily commuters. It is estimated to generate approximately R50 billion annually. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ "This obviously is going to hit our bottom line because it will affect our overall profitability as the minibus taxi industry, given that we still remain unsubsidised, which means we subsidise our customers when we look at how we adjust our fare," Hermanus told broadcaster Newzroom Afrika. Despite the increase, Hermanus said that the industry was not considering a fare hike at this stage. He revealed that fares are typically reviewed and adjusted annually, based on a variety of operational factors. "This increase, as much as it's going to hit us, we are not anticipating that there will be price increases as a result of the adjustment in the fuel price due to the levy. "Because ordinarily, we don't relook at our prices every time there is a fuel adjustment. Most of the time, we adjust our prices on an annual basis, where we look at all the various factors and how much it will cost us to run our business." IOL Business Get your news on the go, click here to join the IOL News WhatsApp channel
